Since 2008, we
have been doing more research into the strategy of
renting versus buying. I have been reading
websites, talking with financial planners and
talking with many individuals who are planning to
journey down this very slippery slope. I have come
to the conclusion that the ONLY people who
unequivocally advocate buying over renting are
people whose livelihood is derived from the buying
and selling of property. I guess that should not be a
surprise to anyone.
Don't get me wrong, I do believe in the concept of home ownership.
Had it not been for the buying and selling of over 9
homes throughout our life, a significant portion of
our current nest egg would not exist. And even
today, there are days when Fran and I wish we owned
the home in which we are living. I would love to
make decorative changes and improvements, but in the
end, I am only the caretaker of the property. I
honestly miss those joys that go along with home
ownership but no way do I miss all the hassles and
Today when the A/C breaks, a toilet doesnít flush,
outside security lights don't turn on or the
pool pump suddenly stops working, I have but one
phone call to make and thatís to my property
manager. No fuss, no muss and no additional out of
pocket expense. For God sakes, Iím a 62 year old
guy with maybe 25 years of life ahead of me. For
me, life is too short to be concerned about such
things. I donít give a ratís ass about investment
potential. Thatís why the $300,000 we would have
spent for a house is still generating a healthy
income (along with the rest of our hard earned nest
egg). What would have been our HOUSE
PURCHASE BUDGET is now our
Through my research, I have compiled comments made
by those who promote the concept of buying over
renting. While I might agree with some of their
logic, I do take exception with a lot of it.
Since their blogs and websites appear one sided and
offer no counterpoints, I wanted to add my rebuttal
and offer a bit of yang to their ying!
Owning your own home allows
you complete freedom to do whatever you
like, whenever you like.
all boils down to "Pride Of Ownership."
you own your home, it appreciates in
value. Should you decide to sell,
there is an excellent chance you will
recoup your investment and then some.
is the most compelling argument in favor
of owning your own home. I can't
disagree with it for I too yearn for the
days when I would enjoy fixing up my
we are retired and our nest egg will provides
financial sustenance for the remainder
of our lives. Our priorities have
shifted to other things such as travel, fun
and freedom. We go wherever we want,
whenever we want.
days of using home purchases as a method
of investing in the future took a
serious hit in 2008 when the housing
market imploded. Housing valuation
is not appreciating at the rate it was
just a few years ago, in fact, some
areas are reporting complete stagnation
and even regression.
Costa Rica today
is a Buyers Market. Waiting five years
to buy will only result in you paying more for the very same property
had you purchased today.
price for homes today are about
HALF the price of where they were 5 years ago.
It is true, we are seeing some rebound in the
economy but it is nowhere near what is
in the US and Europe, buyers are
returning, but not in the numbers they
were back in
the day. Those that are buying
homes today are
paying prices closer to what they were
The availability of
really nice homes for the purpose of
as a long term rental, do not exist.
not want to subject their investment
properties to low price renters.
The owners would rather let the
properties sit, rather than rent.
Owners do not want their
luxury homes to rent for $1000-2000 a
can't speak for all of Costa Rica, but
from where I sit, there is no shortage of nice homes
throughout all of Guanacaste and the
Owners who paid
$5-800,000 or more for homes 7-8 years
ago, now want to sell their places for
a million dollars or more; but that's not
happening. Instead, many have
decided to rent their homes until the economy
rebounds. Unfortunately, nobody knows how long
that timeframe will be, but most are
certain that it will happen.
Just look around at the new infrastructure
popping up here in Guanacaste. We
have a new, modern airport terminal,
a new CIMA Hospital and (in time) a new
Clinica Biblica mega
hospital out by
the airport. This area will spring back
and when it does, the prices will
respond accordingly. But for the
time being, stagnant is the operative
house that has been on the market for a
year or more is ripe for long term
rental. Just because it is not
advertised as a rental does not mean
that it is not. If you see
something you like, float a rental offer.
From the owner's perspective, it is
better to collect some money than none
at all. An owner, especially one
who does not live here, should welcome
the opportunity to have responsible
people overseeing their property.
Renters can make sure the property is
properly cared for and secure from
random crime while at the same time
recoup some of the recurring operational
expenses. Its better than letting
the house sit empty.
Most owners are
not stupid. Many that I have
talked to now realize that it might have
been better if they rented instead of
purchasing. I've said this before
and it bears repeating... It is easy to
buy here but damn difficult to sell. Fact... not opinion.
Those who do insist on
renting houses in
the $1-2,000 range will find it
necessary to lower
their expectations and their standards
in order to find a place to live.
This is total nonsense. Very nice homes,
all built with US amenities, can easily
be found from $650 - $1800 a month right
here in Guanacaste. All have AC,
granite kitchens and modern appliances
while many have swimming pools and
lovely gardens. Some have a
incredible views while others are
located very close to or
right on the beach. Those looking
to live in the Central Valley can get
even more house their rental dollar but
available inventory is much lower.
thought that you may have to live in a
dark "tico house" with suicide showers
and razor wire for protection is absurd. It is not necessary to
lower ones standards in order to live
nicely. In fact, I just visited a 1 one
bedroom condominium, located directly on the beach in
Playa Potrero (near Flamingo) for only
$800/month. DO YOUR RESEARCH!
The market is rebounding
and prices are going up. Landlords are
raising rents or worse, they are telling you to
get out because the house has just been
Inventories of available
homes are at their lowest point in
years. Soon there will no places left
the market is rebounding but NO,
landlords are not raising rents as we
are lead to believe.
Costa Rican law forbids that. If you have
a lease, and you are paying in US
dollars, your rent cannot be raised for
you rent a house that has a potential
sale associated with it, you should
negotiate a clause into your rental
agreement that gives you ample
time (minimum three months) to vacate
and find another place. In
addition, avoid vacating during high
season, especially December through
March, because rental prices will be at
their highest and available inventory at
Here is a powerful
argument/scenario for why one should buy
a home instead of
You find a nice home for
$300,000. But instead of buying, you
have decided to
rent that home for two years for $1500 a
month. Twenty four months later you
have paid out 36,000 and nothing to show
for it but your receipts.
after two years of renting, you decide
you like the house so much
you decide to make a purchase offer.
But after two years you have seen that
the market has changed. Home inventories
have declined and it is now a Seller's
Market instead of a Buyer's Market.
house will now cost you 10-20% more.
least that's the line you were
originally fed when you rented.
is how I see it.
rent for two years and pay the $36,000.
But at the same time, the $300,000 that I
would have originally spent to buy the house,
remained with my Financial Planner
earning 5% over that same period,
$30,000, That reduced my
actual out of pocket rent to just $6,000 for 24
months or $200/month.
However, if I owned the house, I would
have had to pay an additional $600/month in HOA fees, $250/month
in luxury taxes and $70 a month for water.
But wait it gets better. A year
ago we experienced a minor earthquake and
the house incurred some damage.
fell off walls ($450) and the pool
developed two cracks and required
overhaul ($2100). In addition, two AC units (over
the two years) required replacement ($2000).
In total, overhead and maintenance costs
ran an additional $26,630.
subtract the $6,000 I spent for rent
from the additional cost of ownership
($27k), renting actually saved me
wait... let's make it more interesting.
Let's say the new neighbors who just
moved in were "neighbors from hell." They
ran an all night auto repair shop in
their front yard. All night long
we hear the sounds of engines, pneumatic
wrenches and tires squealing.
When ask to tone it down, they
threatened your life. You call the
cops but they do nothing. What to
do now? You can't move... you own
the damn place!
making this up, this is a
true story! As a renter, I can
move. As an owner, I'm stuck in
Arroyo mierda sin una paleta, in other
words... "up shit creek without a
Don't get me wrong. I am not against buying
homes. What I am against is the fear and
intimidation expats are confronted with when they
plan on moving here. Jeez, I never thought I'd
be saying this, but speaking as a senior citizen,
barring a financial apocalypse, our nest egg is
sufficient to last Fran and me the rest of our
lives. We don't need to make
any more money and we certainly don't need to take
on the burdens and hassles of maintaining a home. What
we need to do is carefully
manage what we do have and make sure it supports our
day to day livelihood.
If I was 30 or 40 years younger and had the money, you bet your ass I would
be seriously looking at investing in Costa Rica. That
makes sense. But for older people, who are
looking to retire here on a fixed income... NO I would not recommend
buying. In fact, AARP has reported that
seniors are selling their homes back in the States at
record rates and
then renting. They are talking the proceeds of
their sales, combining it with Social Security and
pensions and living the remainder of their lives at
a higher level of quality and joy.
There are those out there who will disagree with me.
If you care to respond then please feel free to do
so, just keep it civil. I will be happy to
post your comments.
closing, here is a short video produced by my
friends Michael and D'Angelo from
TravelCostaRicaNow.com. In the short
span of 1:40, Michael has hit the nail squarely on
Watch and learn!
The purpose of this article was NOT to bash realtors
nor was it to convince you never to buy a house in
Costa Rica. It is designed to give you reason
to pause and think about your objectives and
Can you imagine what would happen if House Hunters
International ever did a show about a topic such as
this! Holy hell... the world would implode!!!