Introduction
[Mariel Gracia]
Likewise, thank you for inviting me.
Not at all. And for anyone that’s listening, the Central Valley basically is kind of the center part around the capital city. I mean, I kind of consider the Central Valley everything from San Ramon to Catargo, Mariel, but like a lot of people, I think, like, it’s Alajuela, Redilla, San Jose, but like that whole Central Valley area of Costa Rica is really what I want to talk about today.
[Mariel Gracia]
Excellent. Yes, there’s a big chunk of the Central Valley that we have to- Continues to grow, right?
[Richard Bexon]
Exactly. Awesome. Well, Mariel, I mean, like, you know, a lot of volatility continuing in Western markets, you know, government shutdowns kind of at the moment, which is the most, you know, the one.
And I think that, again, that volatility is definitely here to stay for the foreseeable future, as I’ve mentioned before. What are you seeing generally happening in Costa Rica?
Expat Migration Trends to Central Valley
[Mariel Gracia]
I am seeing a lot of expat people, not only from the States, which is our typical scenario, but also from Canada, moving their whole families to the Central Valley, particularly, not only Guanacaste. And I’m also seeing a major shift this year with Jewish families from the States. They’re moving because there’s a lot of antisemitism right now.
So we have had a lot of cases of families that are moving here or also families that are keeping their house in the States, but are buying one here net, just in case it gets worse.
[Richard Bexon]
Well, it’s funny that you say that. I mean, a lot of my clients are, you know, from Jewish backgrounds. But I mean, here in Costa Rica, I mean, I think that there is a quite a strong population.
We also have the synagogue here. And I think also in Jaco, they also have a, you know, one synagogue there as well. Do they have one?
I don’t think they have one in Guanacaste.
[Mariel Gracia]
I don’t think so. Not that I recall. But they have a huge, like a huge Jewish community, if I’m not mistaken, is the fourth biggest on the continent.
[Richard Bexon]
Wow.
[Mariel Gracia]
Now counting the States, after Argentina and Brazil.
Central Valley Real Estate Market Characteristics
[Richard Bexon]
Awesome. I mean, how would you describe the current real estate market in the Central Valley? Because I think it’s very different than the rest of Costa Rica.
It like tracks different. I mean, there’s a lot more local buyers as well. Even though the beach has it, it’s probably 90% foreigners, 10% locals.
Whereas, you know, a while back that was switched the other way, which was 10% foreigners and 90% locals in the Central Valley. And I think that’s kind of changed a little bit, no?
[Mariel Gracia]
I think it has changed a lot since the pandemic, to be honest. But I would also say it’s very different from the coasts, because the coasts are based on high seasons and low seasons, because of the rain. Here, it’s very fluctuating.
It depends on the timeframes of the year. But I am seeing a lot of movement since we’re starting what we call the high season.
[Richard Bexon]
Yeah. And you still get that like high season here of like December, January, February, March, like you do at the beach areas as well? Or you don’t see those huge fluctuations?
[Mariel Gracia]
We do. We do actually. Because that’s when American families have holidays, so that they come to see the properties.
I would say the worst two months for us are like September, October, due to the rain. It’s like our low season. But after that, almost the whole year round is pretty active.
[Richard Bexon]
It’s funny, September, October, in my office, I always say to people like, enjoy the quiet time, because the craziness is coming. The other day, Anna in my office was like, hey, things are pretty quiet at the moment. I’m like, just wait, because the wave is coming.
Right.
[Mariel Gracia]
I agree.
Fastest Growing Areas: Escazú, Santa Ana, Grecia & San Ramon
[Richard Bexon]
I mean, which areas of the Central Valley do you think are developing the most and why?
[Mariel Gracia]
I still would bet a lot, not only because it’s my area of expertise in Escazú and Santana, because foreigners always want to invest in those areas, due to proximity of hospitals and schools, etc. But I also think a lot of other areas in the Central Valley are growing a lot, like Atenas, San Ramon is growing a lot. They’re having amazing developments there.
So I think in the next five years, we’re going to see a lot of growth in those external areas of the Valley.
[Richard Bexon]
Yeah. I mean, on the last podcast we did with Jake Rieke, he moved his family out to El Canal, which is out in Grecia. And he’s just like, it’s just constant construction out here at the moment, they’ve got the revolution free trade zone out there.
So yeah, I definitely think that that area is probably seeing the most amount of growth at the moment.
[Mariel Gracia]
I would say so too, because well, I know the developers of El Canal, but also exactly because of the free trade zone and all of the jobs that that area is producing.
New Development in Belén, San Joaquín & Heredia
[Richard Bexon]
Well, it’s funny, because I was looking at potentially buying a new house the other day, of just the amount of new stuff in Belen and also in San Joaquin and all these areas of Arredia where I was like, wow, all of these new condominiums being tucked away everywhere. I was like, this is crazy.
[Mariel Gracia]
It is. I think also a reality we’re seeing, this is something we cannot ignore, is that there’s not a lot of land anymore in Escazú and Santana. So we need to expand.
Developers need to expand. For example, La Cagio Architects, which are a great development firm, they’re doing a development in Aurelia.
[Richard Bexon]
Yeah.
[Mariel Gracia]
And they’re known for developing in Lindora, Santana. They’re getting a fart because of this issue.
[Richard Bexon]
Yeah. I mean, look, I’m biased to Arredia. I like it just because it’s near the airport, and there’s various ways in and out, because Lindora and Escazú’s traffic can be an absolute, but there’s traffic everywhere at the moment.
I don’t think there’s any way that there’s not traffic.
[Mariel Gracia]
There is. What I try to recommend to clients is buy where you work.
[Richard Bexon]
Yep.
[Mariel Gracia]
Like on the 10 kilometer radius.
[Richard Bexon]
Yeah.
[Mariel Gracia]
That you’re not going to be so stressed.
Best Value Areas: Escazú, Santa Ana, La Sabana & Rohrmoser
[Richard Bexon]
You know, I mean, there are areas that are kind of, again, that are rapidly expanding, but there are probably areas that aren’t expanding. I mean, which areas of the central valley do you think still have great value where you’re like, look, if someone’s looking for value, you can get a lot of bang for your buck in those areas?
[Mariel Gracia]
I would still go for Escazú and Santana because they’re always going to remain great areas because they’re centric and close to a lot of amenities and shops. And I think their resale value, if someone were to buy a property and resell it, the resale value is fast and there’s going to be appraisal. So I would stick to those.
And I think La Sabana and Bromo are growing a lot too.
[Richard Bexon]
Yeah. Yeah. It’s funny that those, again, I mean, the skyline of Costa Rica has just changed so much over the last couple of years, but I know that people, but it’s just, it feels like I remember in Panama City when El Cangrejo and those areas kind of came up that were a little bit more like funky and cool with kind of what’s happening in that Pavas, Sabana, Romasa area.
[Mariel Gracia]
I agree. I joke that it’s going to be like the new Brickle of Costa Rica.
[Richard Bexon]
Yes.
[Mariel Gracia]
But it’s starting to look like one.
[Richard Bexon]
Yes, definitely. And it’s a great coffee shops and restaurants as well, which is nice to see.
[Mariel Gracia]
It is. And it’s nice if someone doesn’t have a car because everything is actually walking distance. So it’s like a cosmopolitan city in the valley.
Central Valley Investment Returns: 7-8% Annual ROI
[Richard Bexon]
Well, look, I think some people, you know, we have kind of a variety of, I would say, expats that are looking to come down here with some that are looking to like relocate down here, some that relocate with families, which is, I think we’re going to start to see more and more of that stuff with the families because the schooling here is spectacular. Again, the cost of living probably is not less than the U.S. in some areas, to be honest with you, because Costa Rica is not cheap. But I was just with a buddy who’s moved from England like two years ago.
And he was like, I am so glad I did this. The kids are so much happier. I was like, any of the kids, you know, because these kids are like three, six and nine.
I was like, any of the kids like miss England? He was like, not at all. Like the weather is great here.
They love playing soccer. They’ve got tons of families and they have his wife is Costa Rica, which helps as well. But we also see investors kind of come down here, Mario, as well that are looking to either park money, you know, or get some form of return.
I mean, is the Central Valley a good place to invest for rental returns? And if you were going to say yes, like what returns can be expected? What would you invest into?
What would you not invest into?
[Mariel Gracia]
I think the returns are always going to be less and more conservative than on the coast, to be honest, like Costa Rica’s ROIs are based on the coast. But I would say residential, it’s around seven to eight percent annual ROI.
[Richard Bexon]
But you know, Mario, seven, eight percent is good at the beach in some areas. I mean, I know like condos in Tamarindo with a property management company and everything getting like three to five percent. So seven to eight is not terrible.
[Mariel Gracia]
Yeah, seven and eight is pretty good. It’s better than any bank. That’s why I tell my clients.
But I think it is a good place to like buy investment properties. And again, because of the fact that it’s close to hospitals and schools, which sometimes in a lot of cities of the Central Valley, the schools are better than in the coasts. Not in all the cases, but sometimes.
[Richard Bexon]
I think I’d probably agree with that. Well, your schooling options are a lot more here than they are in the coastal areas. Correct.
Investment Strategy: Townhouses in Escazú Area
If an investor came to you and said, look, Mario, I want to put, I don’t know, three, four hundred thousand dollars into the Central Valley of Costa Rica. I’m looking for a seven, eight percent return. I mean, where would you I mean, it sounds like Escazú Santana is probably where you’d kind of more push them to.
But I mean, what are they buying? Are they buying a condo? Are they buying an apartment?
I mean, what would you suggest? They’re just like, I just need that seven, eight percent value and easy to resell.
[Mariel Gracia]
I would suggest two townhouses in the Escazú area that are already rented. There’s a lot of options in Boche, Berlin, like with those returns. So I would rather suggest that or cookie, like cookie cutter homes in Lindora, which we also have plenty of.
Market Timing and Price Adjustments
[Richard Bexon]
And talking about reselling, I mean, you know, I mean, the stuff is taking a lot longer at the beach to sell, if that makes sense. Sometimes stuff sitting there for like six, 12 months, whereas beforehand it would sit for like 30, 60 days. The stuff’s not moving as quickly.
How does that compare to the Central Valley?
[Mariel Gracia]
To be honest, the Central Valley has always been a slower paced, so I haven’t seen that much of a difference here. Properties tend to sell within a year to two years. OK, not because there’s bad realtors.
It’s just how the market is. But what we’re starting to see, which is a positive thing, is that a lot of sellers are rethinking their price. And I think that is a key to sell in a good time frame, like well-priced listings.
So we’re starting to see a lot of motivation from the sellers.
[Richard Bexon]
So you are seeing some price adjustments here now in the city, because the beach went crazy, of course. I don’t feel the city went that crazy. I mean, the prices did go up, especially in like Valladolid and all these more prestigious areas.
But like, I didn’t see more that like three bedroom townhomes like go nuts, if that makes sense.
[Mariel Gracia]
No, I would say mostly on the luxury gated communities, like you mentioned. But I am seeing, on a monthly basis, sellers calling me to adjust their prices because they’re ready to sell. So that’s positive.
New US Financing Options Through Second Street
[Richard Bexon]
OK, I mean, if someone comes in, because also people are looking for finance as well now. And, you know, I mean, if they wanted to buy, I don’t know, a $300,000 townhome, like someone from the States down here. I mean, what are their options?
What do their rates look like? What do their terms look like?
[Mariel Gracia]
Excellent. So right now we have a, which has been a major shift this year. We have basically a company called Second Street that is financing Americans and I think soon Canadians that wants to buy properties in Costa Rica.
So they usually ask 25% out of the total purchase price. And they have a fixed fee of $8.28 per year, which is very good.
[Richard Bexon]
I mean, for Costa Rica, I mean, that’s great, probably for the US. And what’s the term length? Is it 20 years or 25 or?
[Mariel Gracia]
25 years. There’s no penalty if they cancel prior or if they inject to the principal, which is great.
[Richard Bexon]
Yeah, I mean, that’s basically, that’s a good rate for a local bank here. I mean, you know, and it’s fixed as well, is it? Or is it variable?
It’s fixed. Wow. Yeah, I mean, that’s great because usually here the banks are not fixed.
So it goes variable, you know, so.
[Mariel Gracia]
I am almost suggesting to every client. Well, to be transparent, you know, most of my clients are cash buyers or are clients, but the ones that need financing, I am actually suggesting them to finance with Second Street because at the end of the route, it’s going to be better because of the fact it’s going to fluctuate with the interest rate. So it’s to have a little bit more of interest rate, but it’s a fixed fee.
I think.
[Richard Bexon]
I’m very happy that that stuff’s starting to happen here in Costa Rica. I know that there’s quite a few private lenders. I say private, but not even private now, more commercial lenders from the US kind of getting involved here in Costa Rica.
So, yeah, which is nice to see. I mean, Maria, you have a bunch of listings that you’re, you know, that you represent. Is there one that excites you and why does it excite you?
Featured Listing: Greenhouse Apartment in Escazú
[Mariel Gracia]
There is one. There is a new exclusive called Inescazú. It’s a greenhouse apartment.
That’s the name of the development. It excites me because I sold this year one apartment there and I think it’s perfect. It’s like a vertical living, one level apartment, walking distance to La Paco, which is great, but it also has views.
So that excites me because I think we have a good niche for that apartment and we’ll sell it soon.
[Richard Bexon]
And I mean, how much is it? How big is it?
[Mariel Gracia]
So it is three beds, 3.5 baths plus the service quarters. It’s 780k negotiable and it’s like 288 square meters around.
[Richard Bexon]
I mean, that’s a good size apartment for sure. I mean, that’s 3,100, 3,200 feet. I mean, that’s a, yeah.
[Mariel Gracia]
Pretty big. And also I think the location is great. If we talk about Escazú, personally, I love that area, which is Javoncillos because you have views, but you also have convenience to La Paco and Los Laureles.
So it’s a great location.
Property Tax Advantages in Costa Rica
[Richard Bexon]
Wow. I mean, Maria, my question that I always love to ask everyone, you know, which of course I always ask at the end of the podcast is like, if you inherited $500,000 and you had to invest it in a business or real estate in Costa Rica, what would you invest it in? I mean, what would you do with your $500,000 Maria?
[Mariel Gracia]
What I would do right now is literally just buy two properties in Escazú, specifically on a condo called The Ivy. Actually, that’s what I want to do, that are rented. So probably I would perceive around 4k between those properties every month.
[Richard Bexon]
Okay. That’s what I would do. So, I mean, you’re looking like 8, 9% probably over the year, maybe even a little bit more.
Exactly. Wow.
[Mariel Gracia]
After HOA around that number.
[Richard Bexon]
And, you know, people sometimes talk about taxes here in Costa Rica. And I think that there is a regime here where you only pay like 12.65% or something like that, just on the tax, on the actual revenue, rather than it actually being like a variable. There’s just a fixed amount that you pay all throughout the year.
[Mariel Gracia]
Correct. Also, that is correct. But also something that I tell American clients, because they’re like, you know, is that our property taxes are way lower than in the States.
So when I tell them the amount, they’re like, are you kidding me? And I’m like, no, this is the amount. So that’s a motivational thing when buying real estate here.
[Richard Bexon]
Yeah. I mean, it’s like 0.25%. So, I mean, it’s like $250 for every 100,000. So on $500,000, it’s $1,250 a year in property taxes, which is nuts, you know.
[Mariel Gracia]
Exactly. We had a client this year from Florida, which clearly it’s like a luxury real estate market that told us he pays $50,000 a year in taxes.
[Richard Bexon]
Oh, my God.
[Mariel Gracia]
And he bought us a property that pays $2,000. And he’s in paradise right now.
Self-Directed IRA Investment and Tax Benefits
[Richard Bexon]
Well, I mean, the interesting thing now is that like, again, you know, as this financial market start to open up, people can invest their self-directed IRAs into this kind of stuff if they wanted to, you know, convert their IRAs into self-directed IRAs and invest. They can’t use it. But I mean, to get 8%, 9%, you know, fixed, own the asset, asset appreciation, you know, is certainly interesting.
And also, if I, you know, if I understand it correctly, again, I’m not a tax expert here. Once you sell something and roll it into something else in the U.S., you don’t pay capital gains, meaning that if you don’t repatriate the money in the U.S., you don’t pay capital gains until you return the money to the U.S. But if you keep it outside, you know, then you don’t pay basically that capital gains tax in the U.S., but also is you can kind of continue to grow that. But any tax that you do pay, you can also, you know, credit back in the U.S. as well.
[Mariel Gracia]
Correct. Which is a great incentive, a financial incentive. And you can also, very important to mention, through the purchase of a property in Costa Rica, you can also apply for the citizenship-based investment, which is very appealing right now.
[Richard Bexon]
Yeah, I agree. I agree. It’s nice to have two passports.
I’ve got a Costa Rican one and a British one. It’s very interesting.
[Mariel Gracia]
Right.
[Richard Bexon]
Yeah. My dad asked me the other day if I wanted a Swedish one because he’s a Swedish citizen. So I was like, I don’t think I’d have much use for it.
But maybe I should, because England is not part of the European Union anymore. But.
[Mariel Gracia]
Right. Well, I think Scandinavia is great and other things.
[Richard Bexon]
Definitely. Cold, but beautiful. Yeah, definitely.
Mariel, it’s been an absolute pleasure having you here on the podcast. Appreciate you taking time out of what I know is a very busy day for you to kind of join us, share your knowledge and experience. Anyone that wants to get in contact with Mariel, all of our contact details are in the description down below.
But very much appreciate you joining us.
[Mariel Gracia]
Thank you so much for your time. Have a wonderful day.
[Richard Bexon]
You too.
[Mariel Gracia]
Take care. Bye.
