Archive for May, 2017

What is the deal with all the Guanacaste resorts?

Written by Michael Simons on . Posted in Buying and Selling Property in Costa Rica, FAQ's, Guanacaste Tourism, Investing in Costa Rica, Papagayo Region, Vacation in Costa Rica

What is the deal with all the Guanacaste resorts? Is it crowded?

One of the characteristics of the Papagayo region is that some of the biggest resorts in the country are located here, with Billions of dollars being invested. THIS IS GOOD for the area and the country. When people hear the word RESORTS, they assume that the town will be overrun with tourists, wearing red and yellow arm bands from the various hotels. Yet, you hardly ever see any of these people in town. Sure, occasionally, on a Friday night in the bars, you will see tourists who have left the resorts to come to Coco to party. Once in a while, you will spot these people in restaurants or souvenir shops, spending their money in the community. But for the most part, they stay in the resorts and very rarely ever wander out.

Four Seasons is one of the Guanacaste resorts

Most of the Guanacaste resorts are 20 minutes to an hour from Playas del Coco and Playa Hermosa, so it is not like they are just across the street. The idea of these hotels is to keep the people IN the resort. They want them spending money in THEIR spa, souvenir shops, restaurants and tour office, and make it very difficult to leave. They spent millions of dollars marketing their kingdoms and want to make as much profit as possible.

So why then, is this good for the area?

First off, these mega projects create thousands of jobs. The local community benefits the most, as everyone is working, bringing lots of spendable income into the homes and families. There is almost NO unemployment here and therefore that is why we have the least amount of crime in the country. Most thieves are not professionals. They are only stealing to feed their families, in times of desperation. So if they can work, they will. These jobs pay more than the average wage, and are considered great career opportunities for many people. Hotel Management is a fantastic way to make a living, with huge upsides. Working in an Air Conditioned hotel as a front desk person, is surely better than what their parents had to do decades before, slaving in the agricultural industry. Even if you are just a maid, it is a consistent, dependable, honorable job with benefits. I know many Ticos who work in the resorts, and they LOVE their jobs, meeting people every day; working for a worldwide recognized brand.  

Over 1 Million people flew into Liberia Airport last year, and over 3 Million total visitors, and many of them stayed in these chain hotels and all inclusive. This creates hundreds of millions of dollars in revenue and taxes for this little haven. Every one of these people paid a $29 Exit Tax in their airline ticket price, and a 13% sales tax on their hotel room. Add it up. For the most part, 95% of all the products served in these places are local Costa Rican goods. Sure, the RIU might have Miller Light or Jack Daniels, but everything else is home grown: Rum, local beer and coffee, along with chicken, fish, beef, pork, sugar, rice, fruits and vegetables; all raised and sold in Costa Rica. Truckloads of products are unloaded every day.  

These Guanacaste resorts spend hundreds of millions of dollars advertising our country, saving us from having to do it. Almost every visitor is going to take at least one or two tours, visiting such iconic places as the volcanoes, mud baths, hot springs, zip lining, animal sanctuaries, rafting, sailboats and more. Many people go every single day of their vacation to a different location and take their entire families along. This puts millions of dollars into the eco tour industry, which employs tens of thousands more Costa Rican. Many of these operators live locally, so again, the money comes back into the communities and our town, as the locals shop in the markets, stores and salons.

Most people are not world travelers; many people never leave the country they were born in. So coming somewhere like Latin America, can be scary for someone, who does not have the confidence to travel abroad. “Are their guerillas in Costa Rica? Is it run by the army? Is it safe? Will we catch an exotic disease? Oh look honey; there is a Four Seasons / Marriott / Occidental / Hyatt / Hilton / Secrets / Westin there.  Let’s use our Rewards Miles and go to Costa Rica.” These resorts offer a “Safe” way to visit paradise. It allows people to taste Pura Vida, in a familiar setting, that they have stayed in before, in dozens of other locations. Then after they get here, they see how wonderful this country is, and fall in love. They notice how clean it is, how there is no violence, how friendly the people are, and they plan another trip back. These resorts exposed them to paradise, and then they return a second, third, fourth trip, with much more confidence to explore.  These people then rent a car, and stay in a condo from VRBO / AirBNB, or a smaller, boutique hotel, and many of them, end up at my RE/MAX office. Welcome to paradise, we tell them.

So this brings us to the big question. How are Guanacaste resorts good for my real estate investment and my lifestyle?

The number one most important reason why the resorts are so vital is because they are the driving force behind the infrastructure. Costa Rica is not a big country and does not have a lot of money. So the government is not going to waste what little it has, paving roads to remote surfing beaches or the rain forest. A small butterfly farm in the middle of the jungle does not employ anyone or pay many taxes, so they don’t care much about those areas. But when a 5 star hotel decides to be built, it probably went something like this.

“Hello Mr. President of Costa Rica. This is the Four Seasons calling; please get a pen and paper. Here is a list of what we will require if we are going to build a $500 Million project in your country.”

Because of all the Guanacaste resorts that have been developed, we have the absolute best infrastructure in the entire country. We have a state of the art airport, 20 minutes away. ALL the roads are nicely paved, with painted lines and reflectors. We have the best internet and cable TV service, and the cell phone coverage is 4G. The electricity never goes out and brand new water lines are being built. There are police and fire trucks and real ambulances. Most important: We have 3 world class hospitals and many local clinics as well, if God Forbid you needed them  Most of Costa Rica does not have these services, it is very remote, rural and a jungle. If you had a heart attack in 90% of this country, you might not make it. But here, in the Papagayo, we have all the First World Services my clients demand.

Because we have the best infrastructure, investors started putting their money here, back in 2004, and the community started to grow. It became a Catch 22 effect. BECAUSE the infrastructure was here, the investors stayed. Because people started moving here, the amenities followed. We have 75 restaurants, coffee shops and bars, 5 grocery stores and 3 hardware stores. There are spas, and hair salons; movie theaters and gyms. We have banks, Cell phone and computer shops, and pharmacies; every single amenity you need to live. And the city of Liberia is just 30 minutes away for services that might not be at the beach. Malls, tire shops, car dealerships and much more, are just a short drive away. The further you get away from the airport and the resorts, the worst the infrastructure and the fewer amounts of amenities. No one is going to take a risk and open a business, if they don’t think they can make money. So even if you like living in a remote place, you are never going to get the services you need. You could be Wolfgang Puck, the greatest chef in the world, but if you opened a restaurant in the middle of nowhere, you will go out of business. No one will come. Because we have a huge community of Ex Pats and Ticos alike, these great amenities will continue to open and thrive.

So this is what it boils down to. Most people, after doing their due diligence, and spending time in the country, end up buying a place here; in the Papagayo area. Playas del Coco, Playa Hermosa, Playa Panama and Ocotal, make up our little bay.  Then from here, they take mini trips, and VISIT the rain forest, jungle and remote beaches. They play Tarzan and Jane for a couple days, and the come BACK to their home; here, where we have the best infrastructure and amenities, and the largest community of Ex Pats in the country.

Hope to have you as a neighbor soon. PURA VIDA.


How much are HOA Fees in Costa Rica

Written by Michael Simons on . Posted in Buying and Selling Property in Costa Rica, Condominiums, FAQ's, Homes

How much are HOA fees in Costa Rica?

Most properties are located in a gated community, with a formal and legal Home Owners Association. The HOA provides the necessary services to run the community; security, administrator, landscaping, garbage pickup, water and sewage systems, accounting, insurance and maintenance of the common areas and amenities (if applied). This of course costs money that must be shared by the property owners in the development, whether it is a condominium or lot / home development.

HOA Fees Costa Rica

Most of these are fixed costs. In other words, items like security are the same price per hour or price for 24 hour period in any development. The difference is, if that guard service is being divided by 12 owners or 24 owners, determines many times, the difference in fees between one development and another. Also, developments with multiple swimming pools, larger landscaping to maintain, and other amenities like gym or beach club, will also be the difference in price between one community and another.

Small condo developments with only one amenity, like a community pool, usually run about $200 per month.

Fancier condo developments, with multiple pools, gyms, beach club etc, run around $500 per month.

These fees usually cover EVERYTHING outside of your condo; maintenance of the building and roof; insurance; common areas etc and all items listed above.

Residential home subdivisions, usually run around $150-275 per month, depending again on how many properties are in the project, and what type of amenities are offered. These fees cover everything that is common in the development. In this type of project, the home owner maintains their own personal properties, paying for their owner landscaping, pool service, and maintenance of the house.

Fortunately, we have no snow removal fees.

Compared to North America, HOA FEES are very reasonable. A nice condominium building in a first class city like Toronto or Miami, can easily run $1500-2000 per month.

Many of my clients come from single family house communities in North America where there are NO HOA fees. Everything is paid for and maintained by the government. But in reality, you are paying for these services in the form of property taxes. Take Boca Raton Florida for example. My property taxes when I lived there were 2% of the house value. So a $500,000 home was $10,000 a year in taxes. For these fees, the city of Boca Raton would supply all the necessary services for the area. When the road needed to be fixed, they did it. They would pick up trees that feel down and make sure the street lights were working. So as an owner, I never had to do anything except pay my taxes.

In Costa Rica, property taxes are VERY low. They are .25% of the value. So that same home would only be $1250 per year! This also means that the local municipalities don’t have a lot of extra money. So they use it to maintain the major thoroughfares, schools, hospitals, fire trucks, police etc; the important things. Smaller roads, inside our subdivisions, we have to look after ourselves. So the HOA fees help to maintain the infrastructure within our communities.

When there is a pot hole in the road, we fill it ourselves. We maintain our own water systems, street lights and do upgrades to the internet cables ourselves. And if a cat is stuck in a tree, we just get our own ladder to help the little dude down. We don’t call the fire department.

So if my HOA fees for my house are $250 per month that equates to $3000 per year. Add that to the $1250 and my grand total for maintaining my development and my taxes are $4250. So it is best to just look at HOA fees as a portion of your property taxes. Compared to the $10,000 you would be paying, you are still substantially lower than if you stayed in North America.

May 2017
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