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105 Understanding buying land in Costa Rica

I discuss what to look for when thinking of buying land and building something in Costa Rica.  I chat about land zoning, what can be developed on each type, what you need to ensure the land has, and the things to look out for.


Contact us: info@investingcostarica.com


Book a free call with Jake (Investment and Real Estate Consultant) or with Ana (Relocation and Real Estate Consultant).

Podcast Transcription

A Richard Bexon Monologue 


Good afternoon, guys, and welcome to episode 105 of Costa Rica Real Estate and Investments. With me, your host, Richard Beckson. I apologize for the gap here.


I think our last podcast was on August 5th. I had quite a few people reach out and be like, Rich, when's the next podcast coming? So I thought I'd actually do one on my own here, just so I could get one out.


But really talking about buying and developing land here, a lot of people are looking to build homes here, you know, looking to buy land and actually build homes. So I just kind of wanted to go over briefly what the things that you need to be aware of when buying land here, just because again, you know, it's, it's, I would say it can be complicated if it's outside of a development. And sometimes even if it's in a development, there are questions that you need to ask, and due diligence that needs to be done as well.


I mean, we spend quite a bit of time just for clients doing due diligence on property when they actually buy it as well, just to make sure that, you know, everything is correct. You know, I mean, I've, I know of people that have bought land, went and done a sole study after they've bought their land and realized that they had to put $50,000 into their foundations. Because again, one of the things to do during due diligence is do a sole study.


So you have to figure out how deep to go with your foundations and how much that that could, you know, incur you or not incur you, you know, sometimes it doesn't incur anything. It's just the, just into the regular price of building. Sometimes, you know, it can cost a lot of money because you need to go down, you know, and compact it and put layers of stone and rock, et cetera.


But anyway, so, you know, I mean, I think the first thing really when talking about buying land is what, you know, understanding really clearly what it is that you want to do with it. You know, do you want to put a home on it? You want a home and, you know, maybe a rental, like a small, you know, a casita, guest house.


Are you looking to do something commercial, like a restaurant? Are you looking to develop something? Are you looking to take a larger piece of land and subdivide it?


And that's a whole other kettle of fish subdividing land. And then also, you know, do you want to put a hotel, you know, kind of resorts on it as well? We're working with quite a few clients at the moment that are looking to do hotels and resorts.


If that's the case, you know, there are particular bits of land that you need to look for, you know, just so you just don't waste time chasing your tail, you know, looking at an agricultural lot that, you know, you can't build a hotel on because, you know, it can't have commercial purposes. So, you know, typically a lot of the stuff that people are looking at, if it's in a gated community, you'll probably find it's a residential lot or a commercial lot. In that case, you're building a home, sorry, a residential lot or a condominium lot, not commercial, you know, you're building a home.


So that's already going to come with restrictions. You know, the CC&Rs that usually these developments have dictate what can be built, it's design, it's color, it's roof, you know, how high you can go, etc. So it's important that you understand that when buying in a development, the restrictions and also the look and feel.


You can't just buy, you know, build whatever it is that you want. Also something that just recently, you know, someone asked me was about blocking somebody else's view. You know, if you're the first one to build and then someone comes in in front of you, you know, they can't block your view, you know, they can cover the view slightly, you know, typically, you know, it's around about 15% of the kind of the ocean, you know, sometimes a finger, two maybe, but they can't just come in and build something right in front of you.


You know, I've seen places before that had to have their roof lowered, because they covered, you know, the view of somebody else beforehand. So again, if you're building a property or looking to build a property where a development is already behind, you know, just bear that in mind as well, just because you don't want the expense of having to lower your roof a little later on when developing. But anyway, you know, so if you're building in a development, you know, buying a development, you know, usually it's going to come with everything you need from water letters.


Also, you know, it's uso de suelo, which is use of the property. That's something really important to take a look at is it's uso de suelo, which is kind of like it's zoning, you know, typically in residential condominiums, it'll be there. But also, it'll also dictate what percentage that you can build on the land as well.


You know, there are some developments where, you know, you can only build up to certain percent on the land. There are certain developments where you can just, you know, have, you know, I don't know, a meter each side, you know, two meters at the front, three meters at the back, and you can build on the rest of it if you want to. So important that you clearly understand that when actually buying as well.


But once you start getting out of, you know, those developments, you start to move into, you know, say, you know, just normal bits of land, which, you know, a lot of the stuff which you'll see is if anything is more than 5,000 square meters, which is usually about 1.2 acres, if anything's larger than that, you're typically going to find it's going to be an agricultural parcel, which they call here is an agricola. Which, you know, many, many years back, what they did was that they, you know, allowed people to subdivide land to 5,000 square meters, so that people could basically build a home on it, and then they could, you know, grow agricultural crops on it to that size.


So anything over 5,000 square meters is going to be an agricultural lot, okay? And there is a restriction. Typically, you'll find it's not a public road.


It's an easement. How do you find that? Basically, ask for the planner.


That's the plan of the lot, and you'll see the road going up to it or the road that touches it, and you'll probably see it's called a servi-umbre, a servi-umbre, which is basically a service-like easement through it. So once it has a service easement or it touches that, it's 100%, it's an agricultural lot. If it touches public road, then that's something completely different.


You know, it can have commercial or residential use if it touches public road and can be subdivided, but I'll not get into too much of the particulars, you know, of subdividing land at this particular moment. But going back to agricultural lots, again, if it's usually, you know, sometimes it can be an agricultural lot inside a residential community as well, you know, which you've seen. You can see that in some of the developments up there in Guanacaste, all over the country, like Black Stallion is one.


I know La Tierra del Mar has some stuff like that as well. Typically, on an agricultural lot, you can only build a 300-square-meter home, which is about 3,200 square feet, okay? So you can't build anything larger than that, unfortunately.


It won't get approved. So you're restricted on how much you can build, and some of you may go, well, you know, I don't want to build a, you know, a 3,200-square-foot home, you know, I just want a 2,500-square-foot home. But then you also need to bear in mind is your outside paved areas, you're also, your pool is counted as well.


I mean, anything that covers the ground, you know, is cut, is usually, you know, is covered in that 3,200 square feet, okay? Also, you're allowed to build a storage, kind of, I would say a storage building, which sometimes, you know, a lot of the time people are building guest houses or casitas as a storage building, and you can also build a guard house as well. And that guard house, again, is then typically another, you know, another guest house or another small building on it.


So, you know, you could build a home and have two small rental units on, you know, which when you're filing them, just be aware that they're going to be filed as, like, storage and also a guard house. It's not out of the ordinary, and then you can actually, kind of, rent those two things as well. So, you know, there are some restrictions there, but I think if you're looking to do something a little bit more commercial with multiple rental units on, an agricultural parcel probably is not right for you.


It can be done, guys. You know, we've done some developments before where, you know, there were individual, you know, casitas, like, small guest houses that were connected by a roof, because as soon as they're connected by a roof, it's one unit. So, there are, you know, as with many, most things here in Costa Rica, and I would say around the world, there are, you know, ways to look at things and ways to do things.


You just need to be able to speak to someone that really knows what it is that they're doing. Just because I've been, you know, I've heard people tell people that, like, nah, you can build, you know, up to, you know, 25 percent or 15 percent on that land. Now, prior to, you know, 2019, yes, you could have done that, but unfortunately, well, fortunately, the law changed on those agricultural parcels after then allowing, you know, basically only up to the 3,200 square feet, just because people were abusing it and building, you know, massive homes on these agricultural parcels, and that's not what it was originally designed for, so that they changed the rules on that. So, just a reminder, if you typically, if it's over 1.2 acres, does not touch public road and on the plan has an easement, it's going to be an agricultural parcel with those restrictions, okay? Sometimes you may find that the lot may be 15,000 square meters or maybe five acres, but doesn't touch public road and has an easement to it.


Theoretically, you could then break that up into, you know, 1.2 acre lots with easements to it as well. You just need to be aware of the availability of the water, because remember, if you don't have water availability in Costa Rica, guys, for anyone that's listening to this podcast, you know, you don't get a building permit. So, you know, well, a water letter, or you can look to build a well and get a concession on it, and that's another kettle of fishes we've covered in other podcasts, you know, and there are some municipalities that will allow you to build where a concession is in progress, because it can take up to two years, you know, sometimes to get a concession approved.


So, as I mentioned, you know, moving on to another type of, you know, property, if it touches public road, guys, you know, typically you can build up to 50% residential or 75% as commercial, but, you know, different areas have a different, what they call plan reglaor, which is like a zoning area. So, you just need to bear that in mind, and that's where the, going back, the uso de suelo is so important, because it really defines what you can do with the property and what you can't. So, for instance, in a place like Playa Grande, when you get the uso de suelo from the local municipality over there in Santa Cruz, you know, it says that there are no, you know, it follows the basically the national regulation plan or the national zoning, which, you know, typically is 50% or 75% there.


You know, and if you wanted to, then you can move it to commercial, you can go to the local municipality and request that the zoning be also commercial, but also your taxes, your municipality taxes will also go up as well. You know, I'm not 100% sure what they are, so I'm not going to say, but typically your property tax is 0.25%. Once you move to commercial, of course, you pay more property tax on that. And public road, you know, typically you're going to be looking at sizes, you know, anywhere from, you know, I mean, I'd say from 150 square meters, which is absolutely tiny, I can't even put that in acreage, you know, all the way up.


I mean, it can get bigger from there. Typically what you have to have is one meter of road frontage for seven meters back. So, if you have 10 meters of road frontage, you have 70 meters back.


So, that would be a 700 square meter lot. So, typically you don't want a lot that's like one meter wide and seven meter back, because you can't do anything with it. You know, so typically people are looking at a width of around eight meters minimum, which means that then they have to go 56 meters back, because remember, for every one meter of road frontage, you go seven meters back.


And on that, basically, you're, you know, you're not that restricted on what it is that you can build on it. You're restricted on the amount you can build on it, but typically when it touches public road, you know, it's kind of free game on that. And it can be subdivided as well, but I just wanted to give you guys just kind of an idea of kind of things to bear in mind, just because you're going to find is that a lot of stuff is agricultural parcels here in Costa Rica, which is normal, and don't be afraid to buy an agricultural parcel.


It gives you a large piece of land, 1.2 acres, you know, and sometimes people are like, no, I want more than that, and I'm like, you know, just bear in mind you're going to have to maintain that as well, because as I say, you know, Costa Rica is plants, everything grows here really quickly and all year round. And if you're anywhere in the jungle, the jungle wants that back. So the maintenance, you know, and the gardening that needs to be done sometimes can be a lot of work.


So just bear that in mind. But anyway, I mean, I just want to give you an idea there, you know, I think we went a little bit further into agricultural parcels there, just because that's where the majority of stuff is. If it is in a gated community, you know, again, you'll typically find that you'll, it's very easy to define, you know, what you can do with it and what you can't, but you can just ask for the, you know, the reglamento, which is the regulations of what you can do and what you can't do.


Unfortunately, usually they're pages and pages long, but it's important that you read them or have, you know, someone like ourselves or a lawyer take a read of them for you. And just to give you a summary of what it is that you can do and also what it is that you can't do. But anyway, guys, I hope this has been helpful for you, kind of about buying land and zoning here in Costa Rica.


There's a lot more that it goes into this, of course. I was actually speaking to a guy the other day who does this up in Canada and he's like, people just come and basically hire me to help them really define, you know, what they can do with something and what they can't. And a lot of time, that's what they do with us as well.


You know, a lot of people talk to us about what they can do with land and what they can't, and kind of just guide them through it, finding the land or helping them through the due diligence or then project managing whatever they're doing afterwards on that as well. Just because again, we speed everything up for them. But if you want to get in contact with us, you can info at investing costa rica.com info at investing costa rica.com.


I apologize that this podcast was just me talking, guys, but I hope it's been useful. If you have any questions, get in contact with us or want any help with anything or any guidance. As I say, you know, I've got 15 minutes for anyone.


I love talking to people. So feel free to just reach out to us again, info at investing costa rica.com. Until the next podcast, guys, I promise the next one won't be me talking, but we'll be with somebody else that's probably a little bit more dynamic than me.


But until the next one, thanks very much for listening.




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Book a free call with Jake (Investment and Real Estate Consultant) or with Ana (Relocation and Real Estate Consultant).

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