Introduction
The number one Costa Rica real estate and investment podcast, bringing you experts from all over Costa Rica.
Richard Bexon
Good afternoon, guys, and welcome to episode 284 of Costa Rica Real Estate and Investments with me, your host, Richard Bexon. Today, we’re going to be talking with Zach Kay. He’s the CEO and founder of Second Street.
It’s a mortgage company offering fixed-interest, 30-year terms on Costa Rican mortgages, which is something unheard of. I think we had Volo Loans on here before, which is similar, but I think these guys are coming with a little bit more batting power than maybe Volo Loans, by the sounds of it. Today, we’re going to be talking with Zach about what he sees happening in Costa Rica and where he thinks the opportunities lie in today’s market based on all of the data points that they have.
It’s going to be very interesting to get his viewpoint because mortgages are a very good indicator of how the real estate market is here. Remember, guys, if you are looking to invest, looking for buyer representation, looking to build here in Costa Rica, or just want to have a conversation with us, you can email us at info@investingcostarica.com. Or, in the description down below are our contact details. Just have a talk with us, guys; there’s no obligation.
We’re not going to sell you on anything; we’re just here to help and guide you. We do a variety of different stuff from buyer representation to project management of builds to developing our own projects where a lot of people that listen to this have invested as well, with investments starting from $100,000. We also have some syndication stuff that we’re about to start working on where I think the investment is going to be around $50,000. You can just reach out to us at info@investingcostarica.com. Those emails come straight to me, and yes, I do have time to respond to them.
Anyway, let’s get straight into the podcast. Good afternoon, Zach. How are you doing?
Zach Kay
I’m doing great. Thanks for having me on, Richard.
Richard Bexon
Not at all, man. It’s been a pleasure. It’s been a while coming, so I appreciate you making the time to join us.
Zach Kay
Yeah, thank you.
Richard Bexon
No worries. Well, look, I think that globally 2025 was politically and economically volatile. I don’t think 2026 looks like it’s going to be any calmer; it may even be more turbulent. Who knows? But from your perspective and what you’re seeing, what do you think is going to happen in 2026 in Costa Rica?
2026 Outlook for Costa Rica
Zach Kay
Yeah. So, looking at 2026 for Costa Rica, one of the really encouraging things that we’re already seeing is fantastic tourism numbers. 2025 was generally seen as a slow year for tourism in Costa Rica. Throughout the beginning of the year and the high season, you saw a single-digit percent reduction in arrivals by air versus the prior year. But for 2025 as a whole, you actually had 1% more visitorship than you had in 2024.
How is that possible, given most of the year felt a little bit soft? The reason why is because tourism in December, one of the biggest months, was up 13% over the prior year. We saw the high season at the end of last year really kick off with a bang, and that has continued. The numbers that came out for January showed a 10 or 11% increase in visitorship to Costa Rica, which is super positive. Costa Rica is really seeing the highest level of tourism to the country that it’s ever seen. That is good for the local economy and the property market. I think we’re going to see that continue throughout this year. I think this is going to be a much stronger year generally than we saw last year.
A presidential election also just happened in Costa Rica. The new incoming president-elect is generally seen as continuing forward with Costa Rica’s relationship with the United States, which is a really good thing for anyone who is an investor in the market. Predictability in that bilateral relationship is really important.
After the president-elect won the election, Marco Rubio, the Secretary of State in the U.S., actually came out and said really positive things about her. He said the United States is looking forward to continuing to closely cooperate with Costa Rica on a number of issues—everything from immigration and secure telecoms infrastructure to American investment into Costa Rica. I think that bilateral relationship will continue to be strong. There’s nothing politically happening to upset that.
The new Costa Rican administration actually seems fairly aligned with the United States on the issues that they want cooperation on, which is all a really good setup for 2026. I’m sure a lot of people, especially those who invest in Costa Rica, always want to say something positive, but I do think both the numbers and what you’re seeing at the higher levels of politics genuinely show a nice setup for 2026.
Richard Bexon
Look, I think Costa Rica is doing amazingly well. As you said there, the U.S. election in November 2024 had a bit of a knock-on effect to the start of our year. There were a lot of people who were upset about it and didn’t really want to make decisions. Now that everyone’s like, “Well, it is what it is for the next few years,” they’re ready to go on vacation.
That’s why we saw those year-end numbers for 2025 be strong. I know we’re going to see strong numbers here into 2026 as well, especially in the high season. It’s going to be interesting to see what happens in the low season. That for me is the watermark of what the year is going to be like because high season is when it’s cold up north and warm down here.
Second Street’s Growth and Demand
When you look at the volume of your work—inquiries, but also people taking mortgages—if you were to compare 2024 to 2025 and what you’re seeing now six weeks into 2026, how does it look? Did it slow down a little bit in 2025? Are you seeing a lot more inquiries in 2026?
Zach Kay
Truthfully, it’s a little bit hard for us to compare because we really started the business towards the end of 2024. I’ve been building Second Street since early 2023, and bringing in the right Wall Street relationships to make that happen took a while. We actually didn’t start offering mortgage loans in Costa Rica until the end of 2024. Fun fact: today is the one-year anniversary of our first closing in Costa Rica. It was a property up in Playa Grande—a million-dollar transaction. It was a great deal that we remember very fondly.
In 2025, we were mostly starting out, so from when we started to now, we’ve been on a J-curve regardless of what the market has been doing. We saw growth every single month last year, but it’s because the business was starting from a small base. Now we have not so small of a base. We’ve grown really substantially in the past 12 months, and we’re seeing a lot of transaction volume now. It’s really just continuing to ramp up. Even if you look over the past few months—and some of this is seasonal—we’re probably seeing anywhere from 50 to 75% more leads per day than we were seeing three months ago. We’re seeing a very robust and healthy demand environment.
Problems in the Existing Lending Market
Richard Bexon
What problem do you think you guys are solving that didn’t exist before? I say that based on the fact that there are Costa Rican banks lending to expats and there is private money lending to expats. Recently, you’ve had Volo Loans enter the market. What problem are you solving that didn’t exist before?
Zach Kay
Before Second Street came into the market, I wouldn’t say there was a real traditional mortgage loan product available to Americans in Costa Rica. I can break down each of the three groups that you mentioned.
When you look at Costa Rican banks, they have been lending to foreigners for a very long time. You can go look at chat forums on the internet and see people writing in all-caps, very upset about trying to get a mortgage loan from Scotiabank, for example. This is a product that all of these banks have been offering for decades. They rebranded some of their efforts a few years ago, but the reality is they just don’t actually do any loans—hardly any.
It’s almost impossible to actually get qualified with one of these banks. The people who go through the process are usually left banging their heads against the wall, and those are the ones who get a positive answer in the end. Most people who go through that long, horrible process don’t even end up getting a loan from one of these institutions.
Then the actual product they offer, if you’re fortunate enough to make it through the process, isn’t the kind of loan that Americans are used to. You’re looking at a 20-year term with an adjustable interest rate, interacting with a Costa Rican bank for the next 20 years, which people don’t love. There are extra hidden fees, big prepayment penalties, life insurance that you’re forced to buy, age restrictions, and in some cases, even health exams. We know clients who, in trying to get a loan from a bank in Costa Rica, have been sent to the doctor by the bank. In the United States, that would be completely inappropriate.
When you look at private lenders, that’s just a very different kind of product. Private lenders offer a bridge loan. If you need to borrow a low loan-to-value on a property because you need cash tomorrow and you’re willing to borrow for 12 months at 12 to 18% just to bridge a cash need, that’s what that product is for. That product exists in the U.S. too, but it’s not really used to acquire or long-term refinance a property because it doesn’t suit that need.
Then you look at other international lenders who have tried to enter the market. There are a dozen of these companies that have come and gone in Costa Rica over the past 20 years. The ones in the market today are really not so different from the ones that have come previously. What that means is there’s no true institutional capital behind them, and the solution on offer is fundamentally unsustainable.
Anybody can come in if you have a few bucks and offer a mortgage loan on whatever terms you want. But mortgage lending is really capital-intensive. If the average loan is half a million dollars and you want to do 100 loans, that’s $50 million you need. If you want to do 1,000 loans in a year, that’s half a billion dollars that you need to deploy. You don’t want to just do that once; you want to be able to do that every year. Who is giving you half a billion dollars a year to lend out in Central America for 30 years at single-digit, fixed interest rates? Nobody’s doing that.
What’s different about Second Street is we’ve brought true institutional capital into the market. My background before starting Second Street was as an investor on Wall Street. I worked for one of the largest and oldest hedge funds in the world called M.A. Management. At the time I was there, we were managing about $70 billion in assets. I was one of 150 people on the investment team. I left that role knowing that if I was going to start Second Street and be successful, we needed to find a real Wall Street backer that could give us a sustainable capital solution.
The problem with smaller lenders is not just that they run out of money, but that when they do, they haven’t been truthful with people. Every other lender that’s tried to come to Costa Rica has promised loans and pre-approved people that they end up not being able to fund. People in Costa Rica have lost their deposits, real estate agents have lost their commissions, and sellers have lost their sale entirely because lenders failed to come up with cash to fund the transactions. If all you have is a credit line from a bank, that’s very finite. If you want to lend for 30 years and you have a three-year credit line, there’s a fundamental mismatch.
Second Street is backed by a publicly listed mortgage lender in the United States. They trade on the NASDAQ, and they are both our largest outside equity investor and the provider of capital that we use for lending. We have a sustainable solution where they give us access to true secondary capital markets in mortgages that let us continuously recycle capital. Our investor has a $12 billion balance sheet, and we have the ability to tap that to make mortgage loans here in Costa Rica. We came with the right war chest. We’ve got the first and only sustainable solution in Costa Rica, which has made us the only reliable, credible lender in the market. It also lets us do things other people can’t do. Second Street is really the only company that can truly offer a 30-year fixed-rate mortgage in Costa Rica at an interest rate that makes sense.
Loan Terms, Property Types, and Borrower Profile
Richard Bexon
So, what is this interest rate, the loan-to-value, the typical down payment, and all of those details?
Zach Kay
The minimum down payment we require is 25%, so we’ll lend you up to 75% of the property value. All of our loans are 30-year fixed rates. Just like getting a mortgage back in the States, it does not matter how high interest rates go in the future; the rate you lock in today is the rate you will have for the next 30 years—unless interest rates go down.
If interest rates go down, you can come back to us and we’ll refinance you at a lower interest rate. It’s truly one-way optionality in favor of the consumer. If interest rates go up, you’re fully protected. If they go down, you can refinance. There are no prepayment penalties ever with Second Street.
Right now, as we’re talking, our starting interest rate is at 8.25%. If you get a loan today at 8.25% and interest rates in six months go to 6%, you can come back and refinance at 6%. On the flip side, if interest rates in the future go up to 10 or 11%, you’re still protected at 8.25%. It becomes free money in a way. You’re getting the true 30-year fixed loan that over 95% of consumers get in the U.S.
Richard Bexon
What do you loan on, and where do you loan? Some people only touch coastal areas.
Zach Kay
Second Street lends nationally in Costa Rica. As long as you are purchasing property that is on titled land, we’re generally agnostic to the location unless there’s a safety issue, like a landslide risk. We don’t have a specific geographic restriction.
In terms of property types, Second Street lends on completed residential property. Right now, we don’t lend on raw land or construction sites. That said, we work with plenty of clients who are buying a new build or a pre-sale, and we can work with a developer on that. We just can’t disperse funds until the property is complete.
Because we do residential, we don’t do commercial property like hotels or restaurants. But within the scope of residential, it’s pretty broad: single-family homes, condos, townhomes, or even up to four-unit properties. If you bought a main house plus three casitas, that’s something we can lend on. You can use the loan for a primary residence, a vacation home, or a pure investment property listed on Airbnb. All of those use cases are totally okay.
Richard Bexon
It sounds much better and more efficient than Costa Rican banks. Do you lend only to North Americans, or do you include Canadians and Europeans as well?
Zach Kay
Today, it’s just U.S. citizens and U.S. permanent residents. But in the very near future—maybe even by the time this is released—we’re planning on adding Canadians as well.
Richard Bexon
Awesome. It’s interesting how this is developing because availability to these types of loans has really held the market back. Sometimes people looking to invest here hire us to help them, and in the end, I say, “Guys, why would you not just do this in the States?” If it’s a pure investment, your property management company might take 25% of your revenue and you’ll end up making 2 or 3%. As a pure investment, you might as well stay in the States.
Costa Rica has the attractiveness of being a lifestyle investment. It’s nice to tell your friends you’ve got a place in Costa Rica. It’s great to see these products starting to come in, Zach. You hit the nail on the head: you guys are the only institutional-style mortgage provider.
Zach Kay
I’ll be honest—it’s hard. People have been trying to do this for over 20 years, and Second Street is the first to actually bring this kind of capital into Costa Rica. Even some of the most prominent business people in Costa Rica have told me they tried to do what we’re doing 15 to 20 years ago. Bringing in the scale and type of capital we’ve brought in just wasn’t doable for them. I look forward to the day there’s a true competitor out there, but my guess is it might be a little while.
Richard Bexon
Costa Rica needs that capital and lending to keep the real estate market moving so it’s not just a cash market.
Zach Kay
Exactly. Imagine if tomorrow no one in the U.S. could get a mortgage loan anymore. The property market would be apocalyptic. The opposite is now starting to happen in Costa Rica. The “apocalyptic” scenario has been the baseline for 30 years, but now this product is coming in and it’s going to change everything. We lend up to 75%, which is four times the amount of money that can come into this market. The supply of land remains fixed, so this is a very important long-term positive for the market.
Lifestyle vs Investment and Where to Buy
Richard Bexon
Zach, you’ve seen a lot of deals. Not as a mortgage lender, but just in general, what advice would you give to anyone looking to invest or buy property in Costa Rica?
Zach Kay
It really depends on what your goals are. Costa Rica is primarily a lifestyle investment destination. If you are looking for pure investment returns, there are specific niches where you can find exceptional returns, but you better know what you’re doing. You need to understand the markets, who’s managing your property, and how to manage it correctly. It’s a real business.
One niche is larger group properties—six to eight bedrooms that can hold a retreat group or an extended family. We’ve seen people earn really strong unlevered returns on those. Now, with the introduction of lending, they can earn even better numbers. People earning 15% cash-on-cash without leverage can now earn well into the 20s or even 30% plus by taking a loan.
For most people who buy here, they aren’t typically buying just for returns. If you buy a property in Los Angeles, it’s usually because you want to live there, not because it provides the best investment returns. Most people are buying this as a place to call their own for a few months out of the year. Part of it is consumption—they want their own place to design and use. It’s like buying a ski chalet; it’s not solely a financial decision, even though it can work out well.
Richard Bexon
I agree. If it’s a lifestyle play, that’s a very different conversation than if it’s just ones and zeros. I once had a client who wanted to sell their place on the North Shore of Hawaii, which was making 12% a year, to buy in Costa Rica. I asked why they would ever do that. Nothing in Costa Rica that they could manage was going to make them 12%.
Zach Kay
Well, there might be a bit of an apples-to-oranges comparison there. Was that 12% return levered?
Richard Bexon
No, they actually had it all in cash. I told them they might as well just take that 12% cash-on-cash and take a vacation to Costa Rica.
Zach Kay
12% cash-on-cash on a short-term rental is pretty good anywhere, and surprising in Hawaii. Did they buy it a long time ago?
Richard Bexon
They got in a long time ago.
Zach Kay
Well, then in fairness, the way you need to look at it is: what would their returns be based on the market value of the property today? They could sell today and invest that elsewhere. I’m sure if you looked at it that way, they’re probably not actually earning 12% based on current market value. In Hawaii, that seems fairly unachievable these days.
Richard Bexon
Probably. Well, my last question for you, Zach: If you inherited $500,000 and you had to invest it into a business or real estate in Costa Rica, what would you invest it in and why?
Zach Kay
I say this without being facetious: I would invest it in Second Street. We are seeing fantastic growth, and this is a business we will continue to invest in. But in the spirit of the question, if I had to invest in real estate, I’d look at two areas.
I personally tend to be a relatively conservative investor. I don’t look at a market and expect the same appreciation for the next 20 years that it had for the last 20. I would look at a market that is a little underappreciated today, like the coastal areas in Limón near Puerto Viejo. Some of the most beautiful beaches in Costa Rica are on the Caribbean side. No shade to anyone in Guanacaste, but I think the food out there is much better—I love spicy food.
A lot of people don’t realize the Caribbean coast has very little beachfront land you can actually buy because of national parks and protection zones. But there are narrow pockets that a good attorney can help you find where the prices are maybe a quarter of what you would pay in Guanacaste. I think the Caribbean has a long road to being developed like Guanacaste, and as a long-term investor, getting in at the right price is a great opportunity.
A place a little further along that curve is around Arenal, where you do a lot of investing. That area has seen a ton more tourism, and the hotel rates consistently shock me. High-end residential development in that area is one of the more interesting opportunities.
Richard Bexon
I’m a big believer in La Fortuna and the mountain areas. Hotels do better up there than at the beaches because when people come to Costa Rica, they always go to the volcano and hot springs. There’s only one location for that, whereas there are multiple beach locations.
Well, Zach, it’s been an absolute pleasure having you on the podcast. All of your contact details will be in the description below.
Zach Kay
Great, thank you so much for having me, Richard. I really appreciate it.
