Does rent to own in Costa Rica exist?
“Can I rent to own in Costa Rica” is a question we get quite often. Some potential buyers, who have never lived in Costa Rica, first want to try first before they purchase.
Moving to a new country is quite a step. Buying a home outright, before you even know if you can adjust to the new lifestyle, is a much bigger step. Rent before you buy also is a much-discussed topic, you can check on that on a different blog.
Not only gives renting you the chance to seriously look around and find the right location to fit your lifestyle. It also gives you a chance to get your residency in place, so you can get a mortgage with a local bank to purchase your house.
Rent to own
So, does rent to own exist in Costa Rica? The short answer is yes. But it is not so simple. Why not?
Lease agreements in Costa Rica are for 3 years. So once the owner signs a lease agreement with a tenant, the house can only be sold with the tenant staying for the leftover duration of the lease term. The tenant cannot be evicted when the house sells to someone else.
There are several types of sellers:
1. The seller who lives in the home he/she is selling.
2. The seller who has already moved elsewhere and the house is empty.
3. A property investor
Owner occupied home
In this case, a rent to own almost never functions. The seller needs the money of the sale to buy somewhere else. This owner will be living in the house until it sells, so it cannot be rented.
The unoccupied home
If the seller of an unoccupied home would be interested in renting, it will show on the listing on our MLS.
In case the house or condo shows for rent as well as for sale, you might be able to get a rent to own. If it is only for sale, don’t ask, you’re wasting everyone’s time.
Investor owned home
The investor owned home is your best chance for a rent to own in Costa Rica. Most investors, once they have decided they want to sell the property, are motivated.
Nonetheless, they prefer not to leave a home unoccupied for a long time, as this will hurt their ROI. There is a good chance, depending on the terms and conditions that must be met by both parties, to get a rent to own agreement in place.
In some cases, the owner will request an earnest money deposit. That will mostly happen if the seller is afraid the tenant will stay the full 3 years of the lease agreement and cannot be evicted. In that case, the house cannot be sold for 3 years, unless it is sold to an investor, who will want a tenant.
Does rent go to purchase price?
Often, it is possible to negotiate a certain percentage of the rent to be deducted from the purchase price. But that depends entirely on how the rent to own is negotiated.
Some think that rent to own means that you can rent a house instead of buying and your monthly payments will be enough to eventually end up owning the house. This is impossible in Costa Rica, without a large amount of earnest money deposit and at the going interest rates.
Look for homes on our MLS that are for sale as well as for rent. Often, it is possible to create a rent to own win-win situation for the seller/landlord as well as for the tenant.
Contact us now if you are interested in a rent to own. With pleasure, we will check on our inventory if we can assist in your preferred location of Costa Rica.
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