How to rent an outdated home that nobody wants anymore
Do you own and have you been trying to rent an outdated home in Costa Rica and it’s been empty for a long time? Does your income depend on being able to rent an outdated home? You are probably in trouble then, because you can’t find a tenant.
That home/investment property has generated during 40 years a nice income has paid for so many things. The rent has paid for the college education of your children. Or maybe allowed you to take nice vacations for the whole family? The good times are over.
What can you do now?
Often, at American-European Real Estate, we receive the request for assistance to rent an outdated home. Owners are used to receiving high rent for the property for many years and are not willing to lower their lease price. The reason is often that the homeowner needs the income to pay the bills.
Who wants to rent an outdated home anymore? There are so many nice new homes and condos for rent, with all those great amenities. Because every tenant wants to live in a home with a nice kitchen, great bathrooms, hot water everywhere and a modern look. Nobody wants to rent an outdated home nowadays, there is too much competition.
There are many large single-family homes/investment properties that were built 30, 40 or even 50 years ago in residential areas that were wow locations at the time. Once prominent areas of the Central Valley are slowly turning into forgotten neighborhoods. These neighborhoods, once prime locations, are now full of outdated homes. Until someone tears them down and builds another high-rise. You can drive through those beautiful old neighborhoods and you’ll find lots of homeowners trying to rent an outdated home. Just to name a few:
- Lomas de Ayarco Sur & Norte
- Barrio La Granja
- Los Yoses
- Paseo Colon
- Don Bosco
- Sabana Sur & Norte
- Trejos Montealegre
- Los Laureles
Last century, most of these homes were beautiful homes. Even though they’re old and not well maintained, the quality materials still show. These homes have beautiful hardwood all over because there was plenty of hardwood available. When the owners of these homes passed away, their children had moved to newer areas and the homes were rented out.
In the 1970’s, 80’s, and 90’s, there was no zoning anywhere in Costa Rica. Most of the large and beautiful homes in the upscale neighborhoods were occupied by lawyers or doctor’s offices, or small companies. Having your office in an older, stately home, showed taste and standing for your company. Then zoning became an issue. Only if a building already has a business license, the Municipality will renew it to the next tenant.
If your outdated home is located in an older residential area turned commercial, such as Barrio Escalante, you are a lucky person. This beautiful old neighborhood has turned into the gastronomic area of the east and has a lot of restaurants occupying many older homes.
The real estate market
The real estate market has totally changed. Families would have up to 10 children in the past century but millennials don’t have more than 1 or 2. Both husband and wife now have a job and live in condominiums or gated communities. Therefore, large single family homes do not sell, unless the property is large enough for a high rise condo.
In large cities in other countries, you will find that the older façades are kept and everything behind is replaced by totally new construction. In Costa Rica, unfortunately, few of those beautiful old façades are kept.
After 1995, the construction of new office centers everywhere created a new era for commercial rentals. Lawyers suddenly wanted to be in corporate centers, so they could have a more corporate personality. Also, now doctors wanted to have their office in a private hospital like CIMA, Clinica Biblica, and Clinica Catolica. There was no more interest for new companies to move into an outdated home.
An expensive outdated home
The reason most of those beautiful homes are outdated is that landlords never invested more than the absolute necessary maintenance in the property. In some cases, the tenants might have updated the kitchen and bathrooms. In most cases, nothing was done. It is very expensive to update a 30 or 40-year-old home that has never seen more than a bit of paint.
We often have sellers who want to sell their 50-year-old outdated home, totally run down, for ridiculous amounts of money. A smart agent doesn’t accept an overpriced listing. Owners of an outdated home should understand that the value of a 50-year-old home is zero.
The value of a home in Costa Rica depreciates 2% per year unless the home is not outdated and run down. An outdated home mostly has no value, except for the lot value. Tearing down a home and trucking away the remnants also has a cost.
What are the choices?
Outdated homeowners have a couple of choices:
1. Seriously lowering the rent and look for additional income elsewhere.
2. Invest a lot of money in remodeling and try to compete with modern buildings.
3. Contact an architect to subdivide the outdated home into small apartments for singles or couples without children, so they can live closer to their job. Nexo Architectura has some really great ideas.
4. To sell the property at a bargain price, so we can list it as a price-reduced property, and recover some money to invest it elsewhere.
Finally, if you are the motivated seller of an outdated home, we’d love to do business with you, at acceptable prices. If you dream of getting rich by selling or to rent an outdated home, you are wasting your time and ours.
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