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For the rest of the world who spend a lifetime working to accumulate some wealth, save and have the opportunity to dream of owning a luxury vacation home, finding a destination and property in which to invest can be among the most important decisions in a lifetime. Costa Rica represents an amazing destination to consider for investment in a luxury vacation home due to a combination of unique factors which can allow for indulgence in luxury, but with a sensible approach that feeds both the soul and your portfolio. I want to outline 6, of the countless, reasons why Costa Rica is an ideal location to consider for a luxury home purchase.
1. Costa Rica
Yeah, sounds obvious and repetitive, but the top reason to consider a luxury home here Is the country itself and its people. Long known as the Switzerland of the Americas, Costa Rica is host to Central America’s oldest democracy, has a higher literacy rate than the USA, chose to abolish its army in 1949 to instead dedicate those resources to health and education, and while it has less than 0.10% of the earth’s land area, it is host to nearly 5% of all biodiversity on the planet. Warm hearted, peace loving people. Check. Stunning natural beauty with nearly 25% of the national land area in some kind or park or protected area. Check. Great health care. Check. PURA VIDA. Check
2. Value
Take five minutes and look for luxury estate homes in the Caribbean, Hawaii, South Florida, California, Cabo, New York, Rocky Mountains or virtually any other developed tourism destination. Take those prices and cut them in half in most cases or divide by 10 in others and you have found yourself in the heart of the luxury home market in Costa Rica. At the Board of Regents members for Luxury Real Estate we are often solicited to include luxury estate homes for publication with minimum price points of $3,000,000. Our biggest problem is FINDING HOMES THAT EXPENSIVE AT ANY GIVEN TIME! There are some homes over this price point around the country, but in general there are luxury homes with ocean views in many great areas of Costa Rica priced from $500,000-$3,000,000 with the bulk of the estate market here being in the $1,000,000-$2,500,000 range for some stunning opportunities. In the premier gated communities pricing increases a bit, but in the global scheme of things Costa Rica is still a value proposition for luxury home buyers.
3. Economic sustainability and rentals.
The incredible demand and growth in tourism figures here has created a very strong opportunity for luxury home owners to either hire management or self manage their properties as short term vacation rentals providing returns that range from sustainable to incredibly lucrative depending on the location, size and how aggressively an owner wants to promote the rentals. These luxury rental properties have proven to be strong cash flowing entities which provide owners the opportunity to purchase at todays values, earn long term equity as the country grows in popularity as well as to generate strong annual returns. Homes like Villa Perezoso represent the peak of luxury and produce 6 figure net returns for their owners.
4. Low Ownership Costs
Unlike most other destinations, Costa Rica has very low ownership costs for luxury homes. Even with the luxury tax which was created a few years ago, the general holding costs for luxury homes in Costa Rica is INCREDIBLY low. Property taxes here are just 0.25% of the registered value of the property, insurance rates are just about 0.25% of the replacement value (thanks to strong building codes and no hurricanes here in the past 100 years) and a luxury tax which is a sliding scale based only on the construction, not the land. With inexpensive labor costs here, staffing and caring for these homes is also very affordable.
5. Diversification
While it is easy to talk about the natural beauty, magical sunsets, wildlife, biodiversity, etc. etc. another important element to consider when analyzing the options of purchasing a luxury home in Costa Rica is simply the diversification of an investment portfolio into real estate globally. In a world so charged politically, with financial markets always subject to macro level socio political whims, oftentimes beyond our control, owning assets out of the USA, with clean and clear entitlement in emerging markets which are easily accessible from the USA, have stable leadership and populace and also happen to be among the most popular and fastest growing tourism poles on the planet provides diversity in an investment portfolio that makes good sense short and long term.
6. Legacy
Ultimately, you can’t create memories with your family and friends in your Schwab account, can’t sip on a cool tropical drink in your 401K, and will likely never share a romantic night with your loved one cuddled in your IRA. While your loved ones might love the idea of inheriting what you leave behind, if you have done it right, they will appreciate more creating lasting memories WITH YOU in a family legacy investment which provides you returns, luxury and long term upsides both during your life and long after you are gone.
So.. again, if money is no object the phone lines are open. If it is an object and you are trying to decide where and how to invest, consider some smart luxury spending on real estate in Costa Rica.