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Investing in Rental Properties in Atenas, Costa Rica

 

Traditionally speaking, real estate has been one of the most stable long term investments an individual could make. In recent years, the global real estate “boom” changed the dynamics and weakened the foundations of these investments, especially in the United States, England, France, and Spain.

 

Millions of people were caught up in the hype, making rash decisions based not on fact or concrete information but on what friends and neighbors were doing, becoming “flippers” and “real estate experts” overnight in order to make a fast buck. Through all of this there have been areas of the world that have had stable real estate markets such as Costa Rica and, in many cases, booming markets like Brazil and Hong Kong. One area of real estate investment that is growing by leaps and bounds on a global scale, particularly in Costa Rica, is the vacation home rental market.

 

So why the sudden increase in vacation rentals? It is a multifaceted answer, but from my point of view the main reasons are ROI (the rate of return on your investment) and demand. With the instability of global markets and historically low interest rates, people are looking for better returns on their investments. Combined with the desire to own a vacation property or future retirement home in another country, a win/win situation is created. Those renting a vacation home can enjoy a private, luxurious property decorated to perfection with 2 to 3 bedrooms, a private pool, maid and garden services and more for as little as $150 per night. This is often much more economical than a traditional hotel setting, and much more enjoyable due to the setting and privacy.

Here is an example of a real ROI on a local vacation rental and long term rental in Atenas, Costa Rica:

 

 

 

Long Term Rental

Vacation Rental

Purchase Price:$225,000.00

Purchase Price:

$399,000.00

Annual Income:  $18,000.00

Annual Income:

$52,000.00

Expenses:  $1,800.00

Expenses:  $7,200.00

Commissions:  $1,500.00

Commissions:  $7,800.00

ROI 6.5%

ROI 9.3%

 

 

 

There are many variables that can increase or decrease your ROI, especially with vacation rentals. There are many vacation rental websites online such as HomeAway and VRBO, where vacation home owners can be hands on and involved in the process of renting their home.  By being hands on, owners can increase occupancy rates and decrease expenses by booking their own clients, thus saving on commissions. However, if you want to maximize your profits by increased bookings, make sure all the local real estate professionals represent your property to give you maximum exposure.

 

With vacation rentals there are more expenses than with traditional long term rentals. Long term rentals incur fewer expenses for the owner because the tenant is generally responsible for all of the cost of utilities, gardeners, pool maintenance, and maid service. Typically a property manager is not needed for long term rentals because there is no constant turnover. On the other hand, with vacation rentals the owner is responsible for everything because the price of the rental is “all inclusive” and providing regular maid service, pool, and garden maintenance are a must. Also, if you do not live in the country where the property is located, a property manager is a MUST and can make or break your investment.

 

In the past five years, Atenas has experienced an exponential increase in homes that have been purchased and put back on the market as vacation and long term rental properties. We have found that many of our clients expect vacation rentals on the coast where you can find fantastic beaches and sports fishing, or in major tourist destinations like Vulcan Arenal, where there is an abundance of activities, But why in Atenas? It all goes back to location, location, location. This small mountain town is within 1 to 2 hours of most major tourist attractions in the Central Valley, and one hour to many of the world class beaches on the Central Pacific coast. In addition, Atenas has two types of tourism: retirement and traditional family tourism. Retirement tourism is different than traditional tourism based on the amount of time the vacationers spend in the area (generally 3-6 months for retirement tourism, compared to 7-14 days for traditional tourism).  

 

Due to these factors, vacation rentals, as well as long term rentals, are in high demand in Atenas. An aggressively marketed vacation property can easily have an occupancy rate of 75%. Our high season runs from mid December through April, and most vacation properties are booked months to even a year in advance. Our “green season”, which starts in May and runs through November, has become a popular time for tourists because there are fewer crowds, rates tend to be 20-30% lower, we still have sunshine, and the entire countryside is a vibrant green! This is also the time of the year for summer vacations in most of the United States, Canada and Europe, bringing a burst of activity to what used to be a sleepy time of the year. At the moment, we are experiencing a shortage of quality long term rentals due to high demand and lack of turnover.

 

If you are looking for a vacation property or thinking of retiring in the next few years, then purchasing now could make sense for you. More times than not, your vacation/retirement property will pay for itself and, in most cases, turn a profit. Don’t let all the negativity you are bombarded with on a daily basis about the global market ruin your dreams of owning a beautiful vacation or retirement home in an exotic destination. An investment property may help you find a way to turn those dreams into reality. In fact, it is very possible that your investment will become more profitable (financially and with life experience) than you every dreamed of. In the end you will be asking yourself why you did not follow those dreams sooner! 

Costa Rica Realtors Chamber

Tours in Costa Rica


Pure Life Development of Atenas is a full service tour company. We feature full vacation packages and day trips for the family. Our tour director Nelson Conejo is very experienced and provides a personal service and attention to detail second to none in Costa Rica. Please write Nelson or give him a call to arrange your next Costa Rican vacation at (506)2446-0447 or

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Retirement Living in Atenas

Interview with Pure Life Development co-founder and certified realtor Dennis Easters, about Costa Rica ranked by AARP as "one of the best places to retire abroad".

 

Atenas Costa Rica

Grecia Costa Rica