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Is Costa Rica Dangerous? – An Honest Assessment

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Is Costa Rica Dangerous?

I was having a beer last night with a friend when an older gentleman, who used to be a neighbor of mine when I first moved to Perez Zeledon, happened by. He proceeded to tell a harrowing story about how he had recently been viciously attacked…

He’d been playing (and winning) in the local casino. By the end of his evening of fun he had a wad of cash to show. It just so happened that this tico (whom he knew) was watching his good luck unfold. While inside the casino, the older gentleman had his dog out in the car with the windows partially down. Well, this tico guy goes out there and gets the door opened and hides in the back seat.

On the way home, the older gentlemen was grabbed from behind by the guy hiding in the back seat who held a knife to his throat. “Give me all your money”, the assailant demanded. This older gentleman is a tough old retired police officer from a U.S. big city and he was not about to give up the dough without a fight. Anyway, he ended up pretty beaten up and stabbed in the stomach. The idiot that had hidden in the back seat was ultimately apprehended. He still has not spend a day in jail over it.

Now, all that sounds pretty bad, doesn’t it? Shit, it even scared the hell out of me…

My personal experience with crime in Costa Rica has been relegated to property crimes and only a few incidents over the last 24 years. But you always hear stories like the one above.

So, is Costa Rica dangerous, really?

Well, yes it is.

Is Costa Rica dangerous to a greater degree than, say, any big city in the States?

No, I’d say it isn’t. And probably even less so.

The best way to approach this issue is with your eyes open. Costa Rica is a poor county. A good portion of its citizens live in what even the poorest in the U.S. would consider abject poverty. There is a good deal of crime coming from illegal immigration. Costa Rica is a gateway country for drugs moving from the south to the consumption engine of the U.S. There is organized crime and gang activity related to the drug trade. Innocents do at times get caught up in it. A lot of the property crime, especially in expat enclaves and high tourist areas, stems from poor ticos being envious of “rich” gringos coming into their spaces and driving prices through the roof. And also, of course, from criminals taking advantage of the disoriented.

All these are just facts…

But, the predominant culture of the Costa Ricans, the ticos, is peaceful. In fact, it is a much more peaceful general outlook than the average joe from the U.S. harbors. There is very little political violence here. In fact, it is rare to even see two ticos getting into a political argument at all. Bar fights are relatively uncommon, at least in the bars that I go to (note that these days I have no idea what happens after around 8:30 pm!). Ticos don’t, in general, walk around jacked up, wearing a scowl, and looking to punch the first person that dares to invade their constitutionally-granted liberty. And unlike in certain states of the U.S., the vast majority of them aren’t packing!

I believe there are some simple ways to avoid being a victim of crime in Costa Rica.

Here are a few…

Don’t flash cash, or any symbol of wealth, especially in places like bars, on the street, or (as the older gentleman above) in casinos!

Treat people with dignity and respect. A lot of the crime that goes on at the beach along our gorgeous Costa Ballena, where home break-ins are relatively common, is due to “inside jobs.” Sometimes that stems from when a tico worker (derogatorily called a “peon”) is stiffed, or treated disrespectfully. Remember, as much as you might think yourself superior, you are a guest in their country. So, mind your manners and go double-time with the golden rule.

Related to the above, be a humble expat. We gringos have a problem with humility, generally. I guess for good reason we consider ourselves exceptional and sometimes it comes across. That’s not a good attitude to walk around with in Costa Rica. It tends to get the wrong kind of attention, if you know what I mean.

Enjoy yourself, but don’t be stupid. Going out at night and partying is a lot of fun in Costa Rica, especially if you’re younger and your body can still weather the pain and suffering that tends to come the next morning. However, also keep in mind that a lot of the crime you read about happens late at night, to people who might not have all their senses in order due to whatever substance they’ve been consuming. So, if you’re going to party, keep it under control and keep your wits about you.

It can pay to take prudent precautions, but don’t go overboard. For instance, I’ve always kinda lived by the expression I heard early on in my Costa Rica adventure. And that one goes like this, “never tempt a poor person.” Basically that means if you don’t want to lose your shit, then guard your shit. That can range from simply never losing eye contact with it, to installing elaborate home alarm systems. But don’t go making your home look like a drug dealer compound. That will also only attract the wrong type of attention.

And that brings me to this last one. To the extent possible, don’t attract too much attention. That’s another thing we gringos have a penchant for doing. We tend to be louder than the ticos. We tend to be ruder than the ticos. We tend to be flashier than the ticos. We already look and speak differently. All this will attract attention. That might be the result you’re after, but if you attract it from the wrong person, you could end up another victim of crime in Costa Rica.

Costa Rica is a paradise in many respects. I’ve been here going on two decades and it really hasn’t lost any of its luster for me. And yet, I’ve never been a victim of a crime any harsher than losing a laptop. I would imagine being a victim of a violent crime could be a strong motivation to pack up and get the hell out of here.

Truth is, you can get in trouble down here, if you’re not careful. That doesn’t mean you have to come with the expectation of becoming a victim. That type of attitude will also attract the wrong attention.

I hope by now you’re sort of catching my drift about trying to not attract attention…

When it comes to the often asked question, “is Costa Rica dangerous?”, please do understand the risks and act accordingly to avoid them.

The Allure of the Costa Rica Southern Zone – Part 2

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The Allure of the Costa Rica Southern Zone - Part 2

I recently published a post on the allure of the Costa Rica southern zone, which was tightly focused on the city of San Isidro in Perez Zeledon and the Costa Ballena beaches of Dominical, Uvita and Ojochal.

However, the southern zone is much bigger than that! So, how about the rest of it?

Well, the rest of it is pretty special too. Therefore, I decided to write another post – the allure of the Costa Rica southern zone – part 2.

Below are a few locales that are worth a look, in random order…

Golfito

This historic port town is located on the Golfo Dulce, not too far from the Panama border. It was until the mid 80’s headquarters of the infamous United Fruit Company. The banana plantations that once surrounded this area and kept the port humming have been replaced with African Palms. Nevertheless, Golfito retains an historic appeal with many of the homes and commercial buildings well-preserved from that bygone era. It is also a very beautiful and serene setting with sweeping views of the tranquil Golfo Dulce.

It is also the home of a major “free trade zone” that lures ticos and expats in to take advantage of “tariff-free” pricing. To do that you have to stay one night in the town, which can make for an adventurous and money-saving mini-vacation.

Puerto Jimenez

The two major tourist “gateways” to the famed Corcovado National Park are Puerto Jimenez and Drake Bay. Corcovado is one of the largest national parks in Costa Rica and the one that National Geographic once dubbed, the most biodiverse area on earth. Puerto Jimenez is the last outpost before reaching Carate Station, which is the southern-most ranger station in the park. It is also near famed jungle lodges, such as the Lapas Rios and La Leona Ecolodges. Puerto Jimenez is also situated on the Golfo Dulce and is a quaint little touristy town that can be a fun place to pass a night before trekking into the park.

Drake Bay

This is where you go to visit the northern end of Corcovado park. Drake Bay is a little harder to reach than its rival outpost, Puerto Jimenez. Most tourists will either fly in, or leave their car at the river town of Sierpe and then take a boat down the river, out into the Pacific, and then around the rocky coast to Drake Bay. Drake Bay is home to some really nice ecolodges, such as Aguila de Osa and Copa de Arbol.

It is also only a short boat ride to Caños Island, which with its coral reef, is one of Costa Rica’s top diving destinations. It is a fairly short boat ride from Drake to the very heart of the Corcovado park, the famed Sirena Ranger Station, which is an unforgettable experience as you will get up close and personal with some of Costa Rica’s most exotic wildlife.

San Vito

San Vito is a small inland pueblo in the canton of Coto Brus. It is very close to the Panama border. There is an official border crossing only about 30 minutes away at Rio Sereno. San Vito is a beautiful area of green rolling hills and is very unique in that it was founded by Italians. You can get great authentic Italian food there. My favorite is Pizzaria Liliana, which probably has the best pizza in Costa Rica.

The La Casona indigenous reserve of the Ngäbe-Buglé, or Guaymi, peoples is also close by. This is an indigenous group that is centered in northern Panama and southern Costa Rica and has a bright and colorful culture.

Boruca Indigenous Reserve

One of my favorite places to visit is the Boruca Indigenous reserve located in the fila brunqueña coastal mountain range, not far from Palmar Norte, where the Costanera and Pan American highways meet. The Boruca people are well-known for their arts and crafts, especially carved and painted masks. The masks are often of a devilish design stemming from their traditional festival called the Danza de los Diablitos, or dance of the little devils. The festival is in December of each year and is a surreal re-enactment of the struggle between the indigenous people and the Spanish conquistadors. The Borucans are also famous for their cloth items, all of which are made on traditional looms with naturally produced colors.

I used to operate a store in San Jose that sold indigenous arts and crafts. Here’s a short home-made video from that era on the Boruca reserve…

Mountain Pueblos of Perez Zeledon

These pueblos are too many to name in this short post, but the entire canton is dotted with them. They can be great places to visit and even live. In fact, I actually do live in one one of them, Quebradas. It is on a gorgeous mountain river, at an altitude that delivers a near-perfect climate, and is only minutes from the city of San Isidro. I believe it might be the best place on earth…I know, my bias is showing. In my real estate practice I get to discover new pueblos all the time and even though I’ve been at it quite a few years now, I know there are many as of yet undiscovered.

I must also give a shout-out to the in-between-area (IBA) pueblos of Tinamastes and Platanillo. These are in the area that’s between San Isidro and Playa Dominical in the coastal mountain range. They are drop-dead gorgeous little towns and you can live in them at high altitudes and if you’re lucky, even have an ocean view. This area is also home to three incredible waterfalls, Nauyaca, Diamante and Eco Chontales.

I know I’m leaving out some of the gems that help give rise to the allure of the Costa Rica southern zone. Please leave comments on anything I might have missed.

I hope my posts are painting a compelling picture for you of how special the Costa Rica southern zone is.

Costa Rica Real Estate Pricing Primer

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Costa Rica Real Estate Pricing

Yesterday I wrote a post about time on the market, inspired largely by a conversation I had with a Facebook page fan.

I couldn’t stop thinking about certain aspects of that conversation as they relate to the dynamics of Costa Rica real estate pricing.

So, I decided to write another post…

One thing that my friend said that made me think harder on this issue is that he believed that there was a supply and demand imbalance (supply exceeding demand) that made it likely that Costa Rica real estate prices were too high.

Let’s explore that a bit further…

Of course, you are well aware of how supply and demand for a product, like real estate, affects pricing…

When supply exceeds demand, prices tend to be suppressed. In real estate terminology, we’d refer to that situation as a “buyer’s market”, since good deals can readily be found.

When demand exceeds supply you have the opposite situation and prices for real estate go up, giving rise to a “seller’s market”, or a hot market.

Where are we with respect to Costa Rica real estate pricing right now, you ask?

The answer to that is very location-specific. Since I work the southern zone, I will focus my answer on that area.

I like to divide the southern zone up into two distinct markets, one for mountains and the other for beaches.

The mountain market is the Perez Zeledon/San Isidro de El General market. I have written in the past about this being an up-and-coming market that I believe will grow into one of the strongest in Costa Rica. However, right now I would describe the situation in the mountains as a buyer’s market.

That buyer’s market situation is gradually changing and that change can be more clearly seen in prices for commercial properties, especially in the city-proper of San Isidro de El General, as well as the outskirts adjacent to the Pan American highway. Deals have been happening at very high prices per meter squared, like a recent downtown deal that went for around $1,250 per meter squared, as well as the property Walmart bought for over $200 per meter squared.

I would nevertheless still describe the situation for residential land and homes as being very much a buyer’s market. Good deals can still be had and owners frequently can be seen lowering their prices to attract more buyers.

The beach market is a different story. Down there properties are staying on the market a much shorter time than in the mountains. I have seen properties get flipped for large profits. In fact, this has the beginning shades of what could become a speculative or overheated market. I don’t think we’re quite there yet, however.

For one thing, our southern zone beach market could not be remotely described as “high-density.” There is good product hidden in the hills that hug the coast, but there is a limited supply of it. It is definitely a situation down there where demand exceeds supply, thus giving rise to increasingly higher prices being paid for properties.

One thing that complicates the analysis on Costa Rica real estate pricing is the fact that often there can be two parallel markets to evaluate, especially in a place like our southern zone. There is the tico, or local, market and then there’s the foreign, or expat, market. What’s happening in one market can have spill-over effects in the other.

For instance, the mountain market is already experiencing more growth in the local market than it is in the expat market. I have seen prices going up for small residential lots that locals are buying and building homes on. Whereas, homes that tend to be priced out of the local market and more towards foreigners are staying on the market longer and often owners are having to lower their prices to attract attention. The beach situation has less of this effect. There is really only one viable beach market and that one is definitely priced for foreigners. I would guess that the situation in a major urban area like San Jose is different and that these two markets are predominantly merged into one.

The post I wrote yesterday took the position that time on the market is not a wholly reliable indicator of proper pricing. That is especially true for North Americans who tend to compare time on the market in the U.S. to Costa Rica. The post yesterday explained why that is not a valid comparison.

Supply and demand meet at the point of transaction. There is a time lapse involved here, whether you’re talking about widgets or Costa Rica real estate. And the point of the post yesterday was that the time lapse for Costa Rica properties is much more drawn out than it is for U.S. properties.

This “time lapse” is of course reflected in the relative liquidity one asset or product has versus another. For instance, the time lapse is probably shortest for a financial asset like a share of stock, versus being much longer when it comes to a slower moving asset like real estate. And that is especially true when it comes to Costa Rica real estate.

Nevertheless, the mere fact that a property has been on the market over a year is not a valid indicator of it being over-priced. It is very common for good and properly-priced properties to stay on the market that long. In fact, the average for time on the market in our southern zone area is even a bit longer, at around 1.5 years.

Costa Rica real estate pricing is not an exact science. We do not have a reliable MLS service down here and realtors pricing properties generally go on gut (or experience), as opposed to hard data. Quite often they’ll go with whatever the owner of the property tells them. Thus pricing can and often does have unrealistic expectations, or sentimental value, built in. In those cases, time on the market can really get stretched out. If you see a property that’s been on the market for over 2, or even 3, years, that could very well be the case.

An understanding of the supply and demand situation in a given market is a good way to judge Costa Rica real estate pricing. Does the price of a particular property reflect a buyer’s market or a seller’s market? What is the actual market situation?

Those are all valid considerations. And time on the market is also a valid consideration.

I just wanted to make sure that point didn’t get clouded into obscurity in yesterday’s post.

Costa Rica Real Estate Average Time on Market

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Costa Rica Real Estate Average Time on Market

I recently had an interesting discussion online with a Facebook page fan. He was commenting on a listing that had been on the market for around 770 days, or a bit over 2 years. His comment was basically that the property must surely be overpriced (and, by proxy, the entire market) if it hadn’t sold in 2 years.

Of course, what he said could be true. Perhaps the property is indeed overpriced. But my response to him was that it was incorrect to leap to that conclusion simply due to length of time on the market.

So, what is the Costa Rica real estate average time on market?

The Costa Rica real estate average time on market for a given property in our southern zone is about 18 months. At least, that’s what most “in-the-know” realtors will tell you. Certainly there are exceptions. Hell, I sold a property for $4.3 million last year within a couple months of listing it! But, talking averages, properties tend to stay on the market much longer here than a market like the United States.

And there’s an obvious reason why. Now, granted I’m not talking about the “tico (or local) market” here. I’m talking about properties that were built by foreigners and are being marketed pretty much exclusively to foreigners.

Another “average” that’s relevant for this issue is the time a realtor must generally work with a buyer before actually making a sale. The number you often hear is 2 years! You heard that right and, from my experience, I can tell you it’s absolutely true. A typical sales cycle will go from discussing properties with a buyer lead online for a year, to an actual visit by said buyer, then another round of online discussions, perhaps another trip, and finally an offer that two to three months later will ripen into the coveted done deal.

You have to remember, as a Costa Rica realtor dealing primarily with North Americans, or Europeans, my buyer leads are not contemplating a move from just across town. They are moving from the other side of the planet, so to speak.

It can be very frustrating for us realtors down here (so be nice to us!), but that’s the way it is working in a market where properties are being marketed and sold, almost exclusively, to folks who live in foreign countries very far away from said market.

So, the main reason for the seemingly long (by U.S. standards) Costa Rica real estate average time on market, even for those properties that are well-priced, is the simple fact of the market dynamics described above.

Now, it’s true that this fact makes Costa Rica properties less liquid than, say, properties in the U.S. However, it doesn’t necessarily make them overpriced. Liquidity should always play an important role in any investment decision. In other words, if you know that you may need to turn your piece of Costa Rican paradise into cash very quickly, at a moment’s notice, then perhaps Costa Rica is not the best investment choice for you. In fact, perhaps real estate (anywhere) is not the best choice for you, period, since there are a myriad of far more liquid investment choices.

The hard cold fact of this painfully long Costa Rica real estate average time on market should make it very clear that buying with a keen-eye towards re-sell potential is very important. Many who buy and/or build don’t do that. They buy or build to their sometimes very peculiar tastes without giving a moment’s thought to the fact that almost no one else in the known universe has those same tastes.

It will serve you well to take note of what kind of properties move the best and try to buy or build something similar. That, plus a reasonable and competitive price, will go a long way towards helping you be one of the exceptions that doesn’t wait for up to 2 years to get your place sold.

If you’re a seller, it’s important to list your property with an agency that has a broad “spider-web”, or network, as Daveed Hollander, the broker with Coldwell Banker Vesta Group (where I work) always likes to say. And I probably should also say that our agency has the broadest and stickiest web in the biz! The more potential buyers your property is exposed to, the better chance you have of beating that Costa Rica real estate average time on market.

Foreigners tend to buy in Costa Rica for reasons that are far more complicated than mere investment value. And for that reason, liquidity is often not given its due in the investment decision process. I don’t know how many times I’ve heard buyers say, “oh, we would never ever sell this place.” I usually reply by reminding them to “never say never.”

So, don’t make gross generalizations concerning price when it comes to the Costa Rica real estate average time on market, like my beloved Facebook fan did. A property could very well be overpriced and there’s nothing wrong with letting time on the market give rise to suspicion that you might be looking at a poorly-priced property…

But the reason for this post is to let you know that that fact alone doesn’t necessarily make it so!

Perez Zeledon and Liberia – A Comparable Growth Story

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Perez Zeledon and Liberia - A Comparable Growth Story

There are two international airports in Costa Rica, one in Alajuela and the other in Liberia. The Daniel Oduber Quirós International airport in Liberia was inaugurated from a small domestic airstrip to an international airport in 1995. Further expansions of runway and terminal were completed in 2012 and 2017.

Currently, the Daniel Oduber Quirós International airport is the country’s second and Central America’s sixth busiest airport. From 2000 to 2018 the number of passengers received has increased from 91,206 to 1,116,810, which is a 14% compound annual growth rate.

The city propers of San Isidro de El General and Liberia are both around 50,000, according to most recent census data. Of course, if you take into account the surrounding area, the population of Perez Zeledon is much larger at around 200,000.

Before the Daniel Oduber Quirós International airport became a frequent international flight destination, Liberia was a typical small rural Costa Rican pueblo that had grown up along the Pan American highway. It was the gateway town to the popular Guanacaste beach areas of Tamarindo, Flamingo and others. Nevertheless, it was the sort of “crossroads town” that you could miss if you blinked your eyes.

That has changed and the airport is the major reason why.

The reason I am bringing this up is because there’s a striking parallel to what happened in Liberia and what’s very likely to happen in Perez Zeledon. The difference is that Perez already has a strong head-start over where Liberia was before their airport was inaugurated. And Liberia is no match for Perez Zeledon when it comes to either topographical beauty or pleasantness of climate.

Despite the differences, Perez Zeledon and Liberia make for an interesting comparable growth story.

I have written in the past about definite near-term plans for a major expansion of the existing San Isidro airport. It will certainly become a major domestic hub and there’s every reason to believe that it will pass through phases of growth that will make it Costa Rica’s third international airport, serving the southern zone, which has been steadily growing in popularity with both tourists and the expat-minded.

San Isidro is the undisputed gateway city to the southern zone. The last few years have witnessed a growth spurt in the canton of Perez Zeledon. The opening of a new Walmart superstore this December is definite evidence of what is occurring here.

The value of commercial land has been on the rise as well. Prices for downtown space with frontage on the major thoroughfare through town are $1,000 to $2,000 per meter squared! I have it on good sources that Walmart paid over $200 per meter squared for the acreage they bought for their new store, which is located on the outskirts of town, with frontage on the Pan American highway. I have a listing for an ideal hotel site that I am marketing for around $500 per meter squared.

Even so, it seems the beaches of the Costa Ballena get most of the attention from North Americans interested in investing in the southern zone. I believe that’s a mistake.

While it is true that spectacular homes have been built in the hills above Dominical, Uvita and Ojochal, many in the million-plus price range, there is a definite limit, in my opinion, as to how much potential growth is possible along our southern zone coast. I really don’t believe we will ever see the type of growth that has occurred in Guanacaste or the central Pacific.

For starters, this is still the last pristine area of coastline, what I like to call the Big Sur of Costa Rica. The mountains that hug the coast are covered in primary jungle and much of the area is protected from development. Unlike the Perez Zeledon area, once you leave the Costanera (coastal highway) and drive up into that coast range (the Fila Costeña), there is very little infrastructure, in terms of decent roads and access to water and electricity. Previous North American developers had dug many wells that were never properly legalized. Recently the government has clamped down on that practice and is refusing to issue permits for non-concessioned water systems, or lots that have no access to legal water. I believe that is partially in order to put the brakes on the potential for out-of-control development to break out along the coast.

My point in all this is to say that I believe that the strongest area for future growth in the southern zone will be in the mountainous areas around Perez and the city of San Isidro de El General. So far, the real estate market in the mountains can only be labeled as slow, compared to the impulse buying of North Americans along the coast. I think that will change in the future.

Those mountains are already home to the 5-star AltaGracia resort, which word has it is about to be taken over by the Four Seasons Hotels and Resorts chain. The area is also home to the Synergida Retreat Center, a multi-million dollar property that I marketed and sold to the current owners.

We are still very early in this growth phase and great deals are still fairly easy to come by in the mountains and far less so at the beach. It might be a wise idea to consider that as you contemplate your future investment in Costa Rica.

And remember, you can live in the mountains of Perez, in a near perfect climate, and still be less than an hour from the beach!

Costa Rica Expat Spirituality

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We expats tend to have more time on our hands than regular folk. After all, that’s why we moved here, or at least it’s one of the reasons, right?

The more fortunate expats among us need not worry at this point in their lives about financial well-being. That one is pretty much solved. Even so, there are other aspects of life that could use some work.

I recently wrote a post about Costa Rica expat creativity. That there are many who come here and get very creative in their expat lives.

But what about that overarching idea of well-being that we tend to lump into the singular term, spirituality? How does Costa Rica expat spirituality enter into the mix?

The idea of spirituality has taken on a whole different meaning for me in the course of my almost two decades-long expat experience. Before I arrived, how well I was doing, or not doing, from a spiritual perspective would have been measured in traditional yardsticks like church attendance, tithing, and saying grace before meals. I can’t say that I’ve done any of those things, not even once, over the last 15 years or so.

Nevertheless, Costa Rica expat spirituality has become an integral part of my life here.

How?

Well, let me first delve a little bit into what spirituality means to me now as a Costa Rica expat…

I’ve written quite a bit about spirituality in my other blog, pithily entitled, Revolutionary Misfit. There you can find posts that I’ve written over the years, like the one on being a Non-religious Spiritual Person (or NRSP) and another about Spirituality in the Quest (as opposed to being in definitive answers). Those posts mark a profound paradigm-shift in my thinking about what it means to be spiritual.

These days spirituality means, primarily, being aware of how I am connected with everything else, including all that’s contained in the natural world and indeed the entire physical universe. For those of you more grounded in traditional “religion”, that probably sounds a little too, well, ungrounded. And that’s perfectly OK. I also strongly believe that spirituality is a completely subjective endeavor. It’s whatever it is…to you.

One thing living as an expat will probably do for you (hopefully) is open your mind. You might even let go of certain facets of ancient traditions. That’s not to deny the depth of tradition right here amongst the ticos. My lord, this country is just as religious as what I experienced in the southeastern U.S. Nevertheless, there’s the practical aspect of living in a foreign place that will broaden your horizons. It will force you to see things from a different perspective. In short, it will expand your awareness of how small your traditions are and how big the world (and the universe) is.

An expansion of awareness will usually come with a corresponding awakening of compassion. And with that awakening comes an enhanced feeling of connection. The enlarged ego that you probably brought with you will likely begin to shrink down a little.

Now, none of this is a given. Things could go the other way and for many expats, that’s very much the case. They come here to feel special and to make sure everyone around knows exactly how special they feel that they are! And that’s exactly what they spend their time here doing, i.e., building elaborate monuments to their specialness.

Of course, we are all special. And it’s really not the stuff you bring with you, or accumulate while here, that makes you so. In fact, for me at least, a deeper sense of spirituality began to dawn with the realization that anything I bring into my life, be it possessions or even thoughts, that enhance a feeling of individuality and specialness, or self-worth, tend to diminish a feeling of connection and spirituality. So, I gave up a good while back all lingering ambitions about ever being rich, or famous.

The funny thing about the jungle is that it doesn’t give a rip about all those testaments or monuments to your specialness. Take your eye off them for just a bit and the jungle will claim them. They will disappear into it, never to be found again. I guess that’s nature’s way of telling us that we’re all really one with it.

And when we reach the last of our days, we will indeed become one with it…

So, why wait?

Why wait so long to realize the spiritual reality of awareness, compassion, and connection?

Immersing with life here just might help you with similar Costa Rica expat spirituality realizations.

That is, if you keep an open mind and loosen mental grips (or “impact blinders”) that hold tight to traditions that prevent you from doing so.

For anyone interested, I wrote an eBook some time ago on this topic entitled, Expat Mindfulness.

The Allure of the Costa Rica Southern Zone

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The Allure of the Costa Rica Southern Zone

The allure of the Costa Rica southern zone that attracted me almost nine years ago was that it possessed both of the things that I love most about the country in general, i.e., its mountains and beaches.

I found out later that the people are pretty special here too!

Now, when I say “southern zone”, I am primarily talking about the mountainous area called Perez Zeledon and the coastal area called the Costa Ballena. Granted, there’s more to the southern zone that that, but this post will focus on those two areas that tend to draw the most people.

To begin, what is it about the Costa Ballena, versus other coastal areas of Costa Rica, that makes it so special? I like to keep things simple, so I’m going to break down the Costa Ballena to its component parts of Dominical, Uvita and Ojochal, and then focus on the “one thing” that makes each part special.

Dominical is a stretch of coastline that is very open to Pacific swells. Back in “the day” the road between Quepos (or Manuel Antonio) and Dominical was unpaved. Only the most adventurous would make that arduous trek, which could take up to 2 hours, versus the half-hour it takes today traveling along the Costanera Highway, what I like to call Costa Rica’s Autobahn. The only real draw back then was the surf. Dominical has some of the most consistent (and at times very powerful) waves of the country. The village grew up into a highly regarded tourist destination wholly on the reputation of it being a surfer’s paradise.

So, it’s the great waves that make Dominical stand out, pure and simple.

Folks that live along the Costa Ballena usually refer to “going into town” as going to Uvita. Uvita is the most active and developed of the three beaches of the Costa Ballena. It is also home to a very famous and popular national park, the Marino Ballena National Park. Uvita has an area we realtors like to call “the flats”, that extends from town (which has developed largely along the Costanera Highway) to the ocean. Moving away from the coastline and just beyond the so-called flats is the Fila Costeña mountain range. Many of the high-dollar homes and resorts built in this area are up in those hills. From there you have a dramatic view of what draws thousands to the area each year, the Whale’s Tail. This is basically a rocky sandbar formation that is shaped just like, you go it, a whale’s tail. That’s very ironic since the marine area off the coast is home to a very important migratory route for humpback whales.

So, what tends to draw people to Uvita are the spectacular views of its famous Whale’s Tail (and, of course, the whales themselves).

As you pass Uvita driving south along the Costanera you will arrive at the final Costa Ballena component known as Ojochal. Tourists in the area have a horrible time remembering and/or pronouncing the name. The pronunciation is easy if you just remember that the “j” sounds like an “h” and the two “o’s” both have the long vowel sound, with the “a” being short, so o-ho-chal.

Now, back before the road was paved, Ojochal was completely off the map for gringos. It really isn’t a place for surfing, so even the most adventurous surfers didn’t pay any attention to it. Boy has that changed. I would venture to say that Ojochal is currently the fastest growing of the the three Costa Ballena beaches. It is also the home to a thriving and close-knit community of North American expats from the U.S. and Canada. A few of them have started restaurants, which has helped Ojochal gain the reputation of being a culinary hotspot. It is also the area where an expat can find a home with ocean view at an affordable price, as those in the areas of Dominical and Uvita tend to be out of budget range for many.

So, what draws people to Ojochal is community, meaning an expat community where there’s always some sort of socializing going on.

If you read this blog from time to time you probably know that I opted for the mountains of Perez Zeledon rather than the beach. You also might have read about my four C’s of Costa Rica expat living (Climate, Convenience, Culture and Context). In my humble opinion and according to my tastes, the mountains beat the beaches on the first three of my four C’s. The last one (context) is entirely subjective. However, if I had to break it down to the thing or things that are the biggest draws for Perez, I’d have to say it’s actually the “three C’s” noted below…

The number one reason any Perez Zeledon expat will mention if you ask them why they live in the mountains versus the beach is climate. There’s a world of difference in temperature between, say, 900 meters (the altitude where I live) and sea level. San Isidro has been called the fastest growing city of Costa Rica. You can live a ways outside of it (in the cool mountains) and still have its many conveniences at your fingertips. I live in the mountains outside of town at 900 meters, but it only takes me 5 minutes to get downtown and often I even walk it! Finally, there is no arguing that you can make ends meet in Perez a whole lot cheaper than at the beach. Perez is a tico-dominated culture, whereas the beach is tourism-dominated. And ticos on the whole simply can’t afford to pay tourism prices. Many of us gringo expats don’t like to pay tourism prices either!

So, what draws expats away from the beach and to Perez Zeledon are the three C’s of climate, convenience and cost.

Of course, it’s all subjective, according to individual tastes, and everything about the allure of the Costa Rica southern zone written above is purely the opinion of a lone gringo who’s lived in the area long enough to sort of have a handle on what makes it tick.

Deciding on the particular allure of the Costa Rica southern zone that floats your boat is certainly the most important thing (for you). I hope this post helps you get your own unique handle on that.

Don’t miss The Allure of the Southern Zone – Part 2

Earning Income as a Costa Rica Expat

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Earning Income as a Costa Rica Expat

Some expats in Costa Rica arrive without ever needing to work another day in their lives. How fortunate for them! Others, like me, have to work for a living.

This post explains the ins and outs of earning income as a Costa Rica expat.

Legal Implications

I was only being half facetious with the “legal” qualifier. Some expats – not you or me, of course – come to Costa Rica with the idea of exploiting the local population for nefarious causes, or they get involved in questionable pursuits. Some of them are shown the door by Costa Rican immigration authorities. Others end up in a Costa Rican carcel (Spanish for jail). Please don’t be one of those!

What can you do legally for earning income as a Costa Rica expat? Well, for starters, if you aren’t yet a resident, or even if you have achieved “temporary residency status”, you can’t be an employee of your own company, or anyone else’s. You can, however, start, own, and operate a business as a manager/owner. You can draw income in the form of cash distributions, or even loans, from that business.

Lifestyle Income Producing Options

One thing many expats get into, including yours truly, is real estate. Now, granted, I’m a permanent resident. So, I could work and draw a salary in Costa Rica as an employee with all the worker’s rights afforded a Costa Rican citizen. I’ve never done that and don’t plan to. But, even if I wasn’t a permanent resident, I could still work as a real estate agent under the roof of a local real estate brokerage. In my case, that’s Coldwell Banker in Dominical. I am essentially operating my own business as an agent. And you can do the same. Many do and do so without ever receiving any form of Costa Rican residency.

There is a wrinkle that has only recently come to the fore for non-resident agents, i.e., perpetual tourists operating as real estate agents. The government agency that regulates banking (SUGEF), especially as it relates to potential money-laundering, is now requiring all agents to register. In order to do that you have to get what’s called a digital signature. In order to get that you have to be a resident. Many agents are getting around the requirement by registering through corporations. But that is more difficult and I wouldn’t be surprised to see the SUGEF close that loophole in the future, effectively making it impossible to legally work as a real estate agent as a non-resident.

Real estate is just one lifestyle business option one might choose for earning income as a Costa Rica expat. Many also operate online businesses as writers, consultants. tourism agents, sellers of various products, etc., etc. These days offering your expertise, or some unique product, online is a great option. You’ve got the whole world as your market.

Renting property, either in the form of long-term rentals, or vacation rentals, is a great idea. You could convert your property to a B&B. You could simply rent out a separate room, or studio apartment, on Air B&B, Home Away, VRBO, or others. You could buy and operate a small boutique hotel.

Many get involved in offering some kind of unique tourism experience to vacationers. Others get involved in producing arts and crafts, or organic products, and sell them to other expats. The list of ideas in virtually endless.

The bottom line is that with a good internet connection and access to the world wide web, the ideas for earning income as a Costa Rica expat are as wide-open as your imagination.

Hiring Employees

Even though as a non-resident, or even as a temporary resident, you can’t work for your own company as an employee, you can still hire others. Costa Ricans can make great employees, sometimes. If you plan on hiring employees in Costa Rica you need to know what you’re getting into. Costa Rica has very strict pro-worker laws that govern employment relationships. Hard-core capitalists would probably call them socialistic.

Employment taxes are extremely high compared to the U.S. Employers must kick in around 26% of wages, with the employee having to pay an additional 9%. The employer is responsible for collecting and remitting these taxes to the CAJA, or Costa Rica social security administration.

Employees are guaranteed a full month’s wage bonus at the end of the year, called the aguinaldo. That must be paid regardless of your business’s ability to pay it. It is also hard to fire an employee and when you do you have to pay them a guaranteed severance plus any unpaid vacation for every year they worked.

I have paid out $1,000’s for these items to employees over the years. It is probably better to steer clear of hiring employees in Costa Rica to the extent that is feasible for your business. And if you do hire, make sure to dot your i’s, cross your t’s, and get a good lawyer to advise you.

Getting Paid

Getting paid from customers buying your goods or services from afar is incredibly easy these days. You can use an online payment processor like PayPal, Square, or many others. You can link your PayPal account to a Costa Rican bank, or it can be linked to a U.S. bank. In the latter case, you can use wire transfers, or ATM withdrawals and credits cards, or a combination of both, to access the funds in Costa Rica.

You can also set up a merchant service account with a Costa Rican bank. It is important to have a corporate Costa Rican account for such purposes, rather than a personal checking or savings account. For instances, a personal account linked to PayPal will only allow you to transfer $1,000 per month from your PayPal balance, whereas for a corporate account that limit goes up to $10,000.

The Tax Man Cometh

Costa Rica will not impose any taxes at all on companies registered in the country, or individual residents of the country, that do not actually generate revenue within Costa Rica. That is far different from the U.S., which taxes the worldwide income of any U.S. citizen, or U.S. corporation.

As noted above, the U.S. has a worldwide income taxation regime. Meaning that the U.S. taxes your income, no matter where it’s generated. So, if you come to Costa Rica and establish some sort of business that generates an income in Costa Rica, you are required to report it on a U.S. income tax return.

However, you could qualify for what is known as the Foreign Earned Income Exclusion. This allows you to exclude from your U.S. income, foreign earned income of around $100,000 per taxpayer (so, $200,000 for marrieds filing jointly). The exact amount of the exclusion is adjusted each year for inflation.

To qualify for the exclusion you either have to have lived in the foreign country for at least 330 days out of any period of 12 consecutive months, or have lived in the foreign country for an entire tax year.

The exclusion is complicated and the ins and outs of its application are beyond the scope of this post. For more complete information, you should obviously consult a tax professional.

As an expat you can have bank accounts in local and/or U.S. currency. There are reporting requirements for foreign owned bank accounts. One is the FBAR (Foreign Bank Account Report), which is required if you have $10,000 or more in your foreign bank account at any point during the U.S. tax year. Also, there is the FATCA (Foreign Account Tax Compliance Act), by which foreign financial institutions are required to report on the accounts of their American clients as part of the U.S. initiative to uncover tax cheats. If you have specified foreign financial assets that exceed certain thresholds, you are required to file Form 8938 (which you would send with your regular tax return to the IRS).

Costa Rica passed a law not too long ago that requires certain accounts, especially those owned by foreigners, to be verified periodically. They call it the requirement to “actualizar datos.” It simply means you have to show them where the money is being generated. The law was enacted to prevent money laundering. It’s not that onerous a requirement, but it can slip up on you. If you fail to do it, you might find your account frozen until you do. The bank is supposed to notify you and give you time to do it, but I’ve had my account frozen without them ever telling me a thing.

How I’ve Made a Living in Costa Rica

I’ve operated a tourism business in Costa Rica since 2003. I now also work as a real estate agent with Coldwell Banker in Dominical. I’ve done other things as well for earning income as a Costa Rica expat. I once owned a small shop in San Jose where I sold 100% indigenous arts and crafts that I acquired on a “fair trade” basis directly from the 6 tribes of Costa Rica. I also sold the arts and crafts online via a web site. So, I’ve done quite a few things to make a living during my almost two decades of expat experience.

With the exception of the real estate income that I generate these days, income that I have earned has always been generated abroad. Virtually 100% of my sales were online and most of the time customers where either in the U.S., or Canada. For years I used a merchant service account in the U.S., as well as PayPal, to accept payments.

I transferred the money to Costa Rica primarily with international bank wires, or I would simply use my PayPal debit card to get money from ATMs in Costa Rica, or make payments with the card. Constantly moving money from the U.S. to Costa Rica can get expensive. It will definitely take a bite out of your profits. Back when I started there weren’t really good options for Costa Rican based merchant service accounts. Now there are. Also, back then there was no way to link a PayPal account with a Costa Rican bank account. Now there is. So, bottom line is that these days it’s much easier to operate your business and get paid than it was when I first started.

It pays to think all these issues through with respect to your ideas for earning income as a Costa Rica expat. How will you get paid? How will you access the money in Costa Rica in the cheapest manner possible?

And most importantly, how will you go about earning income as a Costa Rica expat while still truly enjoying the life that you envisioned having here?

It’s best to take a clue from the ticos, who work in order to live, as opposed to the common gringo mentality of living in order to work.

The Costa Ballena – Costa Rica’s Big Sur

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The Costa Ballena

I write a lot about the Costa Rica mountains in Perez Zeledon, where I live. It is the only place in Costa Rica where you can live in seriously high mountains (highest in Costa Rica, actually) and still be so close (less than an hour) from the beach.

Nevertheless, I don’t want to create the impression that the beach, in and of itself, is not great too!

I have referred over the years to our coastline here in the southern Pacific, the so-called “Costa Ballena”, as the Big Sur of Costa Rica…

Why?

Ok, let me explain the topography of the area a bit. If you take the Pan American highway from San Jose up over the Cerro de la Muerte and then down into the valley where San Isidro de El General is located, you are essentially driving over the tallest range in the country, the Talamancas. Chief among the peaks is Cerro Chirripo, Costa Rica’s highest at 3,821 meters (12,536 feet). Chirripo casts its tall shadow over the entire valley, which spans the distance between the Talamancas and the smaller coastal range, which we usually refer to as the Fila Costeña (also, Fila Brunqueña, after the Brunca indigenous peoples that have long made a home in the coastal range).

The Fila Costeña hugs the coastline and offers scenic and rocky ocean vistas that rival the Big Sur of California. I’m sure some might take issue with the comparison, but nevertheless it get’s the point across.

The Costa Ballena consists of numerous small communities that line the coastal highway, or Costanera. Chief among them are the popular tourist areas of Dominical, Uvita and Ojochal, with Dominical being the most northern of the three and Ojochal the most southern. However, each is only about 15 minutes from the other and the highway that links them is one of the best in Costa Rica, so it is very easy to travel around in the area and experience all of it.

There are a number of reasons this area is really very special…

First, there are the waves. The perennially popular “surfer dude” town of Dominical boasts some of the most consistent breaks in the country. However, there are numerous other surfing spots that dot the coastline as well, with waves that range in class from only for the experienced to perfect for beginners.

Then there’s the flora and fauna. Quite a bit of area is covered by the Costa Ballena. Unlike our neighbor to the north, Quepos and the popular tourist destination of Manuel Antonio, there is virtually no high-density condo-type development along the Costa Ballena. For one the topography of the area doesn’t really lend itself to that and second, the government has been quite guarded against any development that would threaten one of Costa Rica’s last largely undeveloped stretches of jungle-covered coastline.

So, the mountains that hug the coast are carpeted with a lush and green rainforest that is absolutely teeming to the brim with flora and fauna. Just to the south of us is the famed Osa Peninsula and the Corcovado National Park, which National Geographic once dubbed the most biodiverse location on the planet.

Despite the claim of the area being largely undeveloped that I just made above, there are nevertheless a lot of attractions that are making the Costa Ballena one of the fastest growing tourist locations, as well as a favorite retirement haven for expats…

The tourist options in the area are varied. I already mentioned the great waves. We also are blessed with the Marina Ballena National Park, which is a vast stretch of beach and marine park area that contains an important migratory route for the humpback whale. During the prime whale-watching months of August, September and October, many tourists come to the area to get a glimpse (and possible a splash) of these magnificent creatures.

The adventure-loving expats that one can find in our area love it primarily because it has not undergone the dense development of other areas, like Manuel Antonio, Tamarindo, or Jaco. Many have bought or built homes up in the hills with incredible ocean views, cool breezes and surrounded by their own private jungles. Many have opened cool and hip businesses that help make the bar and restaurant scene a very active and fun one.

The Costa Ballena is also home to the annual Envision Festival, which occurs in February of each year. It is Costa Rica’s version of “Burning Man” and it attracts thousands who are looking for the unique spiritual experience it offers.

Of course, my favorite thing about the area is that I can live up in my blessed mountains and still be close enough that a day-trip to the beach is an ever-possible spur of the moment decision at my disposal. You just can’t say that about any other area of Costa Rica.

And the city of San Isidro de El General, which lies less than an hour from the coast, is one of the fastest growing in Costa Rica and likewise offers the beach dwellers a great option for shopping, medical services, and entertainment choices that seem to grow a bit day by day.

You just have options in our area that other parts of Costa Rica can’t provide…

You can be like me and live in the mountains and visit the beach any time you want. Or you can live at the beach and visit the mountains any time you want.

In my opinion, for the Costa Rica expat who really wants to experience what “the real” Costa Rica is all about, it just doesn’t get any better than that!

The Costa Rica Real Estate Purchase Process

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Costa Rica Real Estate Purchase Process

The Costa Rica Real Estate Purchase Process – In 4 “Easy” Steps…

I get questioned often about how the Costa Rica real estate purchase process compares with that of the U.S., or Canada.

The truth is it differs quite a bit…

Step One – The Offer

You make your offer very informally, usually via what we call a “letter of intent.” Back in the states we used letters of intent for mergers and acquisitions type deals, but for real estate sales, offers were made via approved forms that all realtors used and would just fill in the blanks. Here in Costa Rica there is no “approved” form. The letter of intent, or LOI, is usually drafted by the realtor. They differ in content and style from agency to agency. The purpose of it is basically to hold the deal in place, so to speak, until an attorney-drafted real estate sales and purchase contract is prepared.

Key components of the LOI are of course the price and terms of purchase, the amount of earnest money deposit (usually 10% of the purchase price), the time period for due diligence and closing, and and other special terms that need to ultimately make their way into the contract, or SPA. Once the SPA has been drafted and signed by all the parties, the significance of the LOI passes into history.

Does the LOI effectively take the property off the market? It should and most of them are drafted to say such. But many realtors will continue to market and show listings under an LOI up and until the SPA is signed.

Is the LOI binding and enforceable? Not really, in so far as a suit for “specific performance” is concerned. So, in that respect, it is more like a written-down handshake agreement that will be succeeded by an enforceable contract, usually very quickly. There is no earnest money put down by the buyer as a result of the LOI. That doesn’t come into play until the contract is signed (see below).

Step Two – Contract & Escrow

The LOI starts the time clock running to get the deal to an attorney who will draft the contract, or what we call the “SPA” (for sales and purchase agreement). Usually an SPA can be drafted and ready for execution within a week of signing the LOI. The SPA is certainly enforceable, although the effort, cost, and time involved in actually enforcing one through Costa Rica courts is a topic for another discussion.

The SPA will be much more detailed than the LOI, concerning purchase terms, representations of the parties, responsibilities of the parties during due diligence, consequences of default, etc. It is customary for the buyer’s attorney to draft the SPA, unless there will be seller-financing involved. In the latter case, the seller’s attorney usually drafts it. Costs of drafting are normally split 50/50 between buyer and seller.

If the parties to the deal are English speakers, the SPA will be drafted in English. It is never recorded, so there is usually no need for a Spanish translation, unless one of the parties to the deal specifically requires it.

The execution of the SPA begins two important time clocks. One is for the buyer to set up an escrow account. Almost all deals are done through escrow in Costa Rica. This is necessary both for security of the parties, as well as compliance with Costa Rican banking laws. It is virtually impossible for real estate transactions, involving large sums of money coming into the country from outside, to be conducted without escrow. The buyer is usually given a week, or two, to establish escrow. Setting up escrow is a bit of a pain in the ass for buyers, as they have to produce detailed documentation showing the origin of the funds. You basically have to prove you’re not a money-launderer.

Once the escrow is set up and ready to receive funds, the buyer will wire the earnest money deposit into it. The earnest money deposit (usually 10% of the purchase price) is refundable to the buyer up and until the due diligence process is completed satisfactorily (see below).

And that is the other time clock that starts ticking at the time of execution of the SPA, the 30 – 45 day (or longer, as the parties may agree) time period for the buyer to complete due diligence.

Step Three – Due Diligence

The due diligence period begins at the time of signing the SPA and is customarily around 45 days, but can be shorter or longer, as the parties might agree. Items that are usually important for the buyer to investigate are: the construction integrity of the home via a home inspection; a re-measurement of the property’s borders by a licensed surveyor; and a thorough examination of the title record by the buyer’s attorney.

The buyer can back out of the deal at any time during due diligence, for any reason whatsoever. Once the due diligence period is complete the buyer will be asked to sign off and approve that he or she is ready to go forward to closing. At that point, the earnest money “goes hard,” and is non-refundable.

What happens if problems are uncovered during due diligence? These have to be presented to the seller and usually additional time will be given for the seller to remedy them, as necessary. Of course, the seller can refuse and then the buyer has to decide whether he or she will waive the objection and proceed anyway. Another way to settle these matters is with some sort of price concession.

Step Four – Closing

The SPA will also specify the length of time for closing once due diligence is completed. Customarily, this is a period of around 2 weeks. During this time the buyer will need to send the balance of the funds to escrow. It can take up to a week for these funds to reach the account and be credited and ready for closing. I’ve seen closings delayed more for the fact of money not being available than for any other reason.

The closing attorney (usually the buyer’s attorney) will prepare the deed, which in Costa Rica is called the “escritura de traspaso”, or simply the escritura. This document will be in Spanish, as it has to be recorded in the National Registry for the deal to be effective to transfer the property from seller to buyer. Unlike deeds in the U.S., the escritura is very long and detailed and the most time consuming part of the closing ceremony is when the attorney “verbally” translates the escritura into English.

What are the typical closing costs? There’s about 4% of the deal amount that I like to call “pure closing costs.” These include the transfer tax, stamp fees, and the notary fee (which is basically how the closing attorney gets paid). This 4% is customarily split 50/50 between buyer and seller. The SPA will of course specify this split and it is a completely negotiable item. With the new capital gains tax that sellers are starting to get hit with, realtors are suggesting more often that the buyer pay 100% of closing costs. It addition to the pure closing costs, the buyer will also pay for his or her due diligence costs, which can add up to another half a percent to the buyer’s side of the closing statement.

Unlike the myriad of documents one normally has to sign when closing a real estate deal in the States, in Costa Rica essentially there are only two: the escritura and the proceeds disbursal agreement that will instruct the escrow exactly how to disburse the funds at closing.

Of course there are some “details” I am leaving out and there can be (and indeed often are) wrinkles in the Costa Rica real estate purchase process laid out above in simplistic terms.

However, in a nutshell, the above is basically how the Costa Rica real estate purchase process shakes out in a typical deal.

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