When you want to buy a Costa Rica property, you need to get a good perspective of the market

Hello Everyone

I share with you comments that I hope will be informational and helpful concerning real estate to you, your family and friends. My comments are based on my personal perspective of the real estate market here in Costa Rica.

Owner Financing

If you are selling your property during this economic time you may strongly want to consider owner financing. The reason is - before the downturn which we are all aware of - most American buyers paid cash to purchase.

Currently- the majority of buyers would like some type of financing - preferably owner. Bank financing is there but is more difficult than owner financing and you pay the bank higher fees. If you tell the bank you are self employed - like American banks - what is your blood type.

Why And How

Financing makes the purchase more appealing to the buyer and enables them to buy which might not happen otherwise. If you do finance I would recommend short term - 3-5 years. You can opt to extend after the time period but at your option. If the buyer has made payments on time, kept the property insured which should be a requirement and has taken care of the property - you may want to extend.

Down payments I have done with owner financing range between 20-50%. Whatever is your comfort level is what you should do. The down-payment should be your safeguard for at least a two year period in case something happens. You can amortize over 20-25- 30 years or less with the balance due at the end of five years.

Your particular situation is important in the decision to finance. If you need to cash out- then you have no choice. If you do not need all cash - then a return may be something to consider. Property, of course, should be free and clear.

I am currently working on an owner financing deal. The sellers do not need the cash and did not think about owner financing - after our discussion, they like the idea.
Several reasons are 1) easier to sell 2) a return on their money- they are the bank 3) take the sale price - take your monthly payments you are going to receive over a five year period and add those payments to the sale price - your actual sale price is a lot higher because in any five year loan the buyer is paying practically all interest and the loan balance is due after five years. The actual sale price number will pleasantly surprise you.

This is the way banks made their fortunes until they forgot to get down payments and make good loans.

Risk

There is always a risk and I would never tell you different. That is one reason why I suggest short term and renewal at your option. Control as much as possible what is going on.

Interest Rates - Costa Rica - I have seen 7% -- 12% for owner financing.

Here in Costa Rica - mortgages are registered and a satisfaction has to be entered to clear the mortgage lien. You have a lien on the property until such time it is cleared.

Correctly and legally are important points.

As stated earlier, this is my perspective- I am sure many of you would have interesting comments as well and your comments are respected and welcome.

Thank You and Best Regards – Rudy

Rudy Matthews is a former Tampa, Florida resident with a vast and varied experience in real estate. Rudy is our primary Home Specialist and will provide you with an excellent perspective of "Quality Lifestyle Communities". His in depth background in real estate is very helpful to you in identifying sound and safe opportunities here in Costa Rica. He is a low key consummate professional and many satisfied clients appreciate his straightforwardness and honesty.