Costa Rica Buy and Build versus Buy Built Dilemma

Many of my customers aren’t sure whether they want to buy land and build, or just buy a finished house, turn-key and ready to move in, with suitcases in hand. Others are completely and adamantly clear on the issue.

This post is written for the former types…

So, what is the better choice?

So, you ask, why would anyone want to undergo the hassle of buying land and building in a foreign country, instead of just finding a quality home, already built, that passes inspection?

Well, there are many reasons…

Here are a few that come to mind…

There’s the reason of pure investment return. It is true that you can, or it is possible, to buy a lot and build and end up with something worth more, considerably more, than you put into it. For instance, you could buy an acre of land at the beach, with an ocean view, for say, $125,000. You could build a 2 bedroom, 1,500 square foot, home on it, for say 120 per square foot, or $180,000. Add a pool for another $20,000 and be “all-in” at $325,000 and at the end of the day have something you could potentially sell for $350,000.

“On paper” you just increased your net worth by $25,000 and have an unrealized 8% return on your investment.

Notice, I said that it’s possible to accomplish the above. It’s also possible to screw up in a myriad of ways and end up paying more to build than the home will be worth once built. The key to success in this regard? Well, not overpaying for the land, of course. Also hiring a builder that keeps costs at budget, or below. And, perhaps most importantly, building something that will have a high re-sell value.

So, again it’s possible, but there are a lot of variables (or risk factors) involved. And the above calculations do not put a cost on the time, effort and humiliation you will probably undergo in the process!

Some people have an idea of what they want and just can’t find it already built. So, they have to hire an architect, draw up the plans, and build to their own specifications. If you are in that category of “picky” buyer, then by all means take the plunge and build. However, if you want to also have success with regard to point #1 above, just make sure that your idea is something other people would also find attractive, if you know what I mean.

Then you have that person who finds the “perfect” piece of land and just has to build on it. I find it a bit difficult that the “perfect” piece of land actually exists, but I have had buyers who just fell in love with a lot, usually because of the view. There’s an awful lot of land out there for sell, listed and unlisted, so be careful about regarding any particular piece you might stumble upon as being “perfect.”

Also, make sure you can actually get a construction permit to build on your “perfect” piece!

Oh, buy the way, don’t be one of those gringos who tries to do everything the short-cut way, for instance, building a house without a permit. Yes it can be done and is still done (although less often than in the good ole days), but that doesn’t mean YOU should do it!

Some buyers just relish the challenge of building in Costa Rica. Now, those are rare birds, but if you are an experienced builder back home and believe you can handle the heat of building in a foreign country, then by all means have at it.

Of course, you can also have a buyer who’s a combination of some, or all, of the above. If that’s you then I would say you are the best possible candidate to build successfully in Costa Rica.

I’m not going to go into the ins and outs of building, although here’s an article by Ivo Henfling that does that to some extent. You will probably need to hire a general contractor type, who speaks English, to handle things for you. That is, unless you can communicate well enough with Costa Rica contractors who don’t speak English AND you will be present in Costa Rica a good deal of the time during which the building will take place. It can take anywhere from 8 months to a year to build. It’s usually better to try to accomplish a good chunk of that, especially before being under roof, during the dry, or summer, season (December through April). Otherwise, workdays will be limited and the timeline can get drawn-out.

Building a home in a foreign country can be an exciting and rewarding undertaking. It can also be a nightmare that you’ll spend your first years in Costa Rica recovering from, if you ever do fully recover! In my opinion, it’s smart to weigh your objectives against the potential risks very carefully and proceed intelligently.

And you can too!

Before you decide regarding the Costa Rica buy and build versus buy built dilemma, please make damn sure you know exactly what you’re getting yourself into.