Think it through before you decide to rent out your property
Some buy a property in Costa Rica just to enjoy it. Others buy, hoping to rent it out and make some money. However, renting sometimes isn’t as great as others make it out to be.
First, run the numbers. Make sure you have an idea of what kind of income and expenses you’d realistically expect. Consider rents in your area. Consider occupancy rates where your home is located. Make sure to bake in anticipated costs for property management fees, maintenance and repairs. Bottom line – determine if renting financially worth it.
Second, decide if you want to rent before you furnish your home, as that will determine what type of furniture, fabrics and accessories you’ll want to have in your home. See “Outfit your new home based on your Usage Strategy” below.
If you decide to rent, consider these tips
If you do decide to rent, take time to find a really good property manager. Property managers come in all flavors. Some really work hard to rent out your property. Others do only enough to get by. Some know how to market your property and generate rental leads. Others don’t. Some know how to take care of your investment. Others not so much. Some work hard to ensure your renters have a great stay. Others may not seem to care as much. Note, if you use MyPlace Costa Rica to help you find your place in Paradise, you’ll have access to our Preferred Provider network of only the best property managers in Costa Rica. Learn more about MyPlace benefits here.
If you decide to rent, don’t depend solely on your property manager to generate all of the business. There are lots of great rental sites that you can post the property on yourself. Such sites include www.vrbo.com, www.airbnb.com and www.flipkey.com. So, to maximize your rental income, don’t depend 100% on your property manager to generate rental leads for your home. Remember to coordinate your own rental listing work with your property manager though, so you don’t end up with two listings for your property on the same rental site.
Also, if you decide to rent, then be prepared for extra expenses…repairs, replacing furniture that gets damaged, wear and tear, disappearing household accessories, pillows, linens and towels. Also, be prepared for complaints from renters about the property manager or that the house wasn’t clean when they checked in. Extra expenses and complaints are just part of the rental property ownership experience, so just don’t get discouraged or overreact when they occur.
Outfit your home based on your Usage Strategy
Before you furnish and decorate your home, first determine your usage strategy. By usage strategy, I mean…what are you going to do with the property, now that you own it? Do you want to just use the property yourself a few times a year? Or, do you want to rent it out? And, you may decide to rent it a week at a time to vacationers, or you may decide to go after long term rentals (ie rental terms of 1-12 months). Choose your usage strategy first, then outfit your home accordingly.
For example, several years back, we purchased a condo near Flamingo Beach. We didn’t think about our usage strategy first before we furnished. Rather, we furnished it like we planned to use it exclusively for ourselves (expensive furniture, gorgeous fabrics, tasteful accessories), and then decided to rent it to vacationers to help with the expenses. Big mistake. Turns out that high-end fabrics and furniture don’t hold up well to throngs of families coming in and out. They don’t hold up to parties and drink fests. Fancy couches don’t survive for long with six kids in sandy wet bathing suits sitting on them every night. Nice chairs don’t stay nice long with Dorito crumbs between the cushions. Oh, and don’t forget lots of guava jam and cheap peanut butter on your accent pillows. Or, sunscreen residue on the braided silk comforter in your master bedroom. How about crayon markings on the silk lampshades…ugh. In hindsight, we should have outfitted our home with less fancy and less expensive furnishings to align with our usage strategy of weekly rentals to vacationers.
But, if you decide to reserve the home primarily for your own enjoyment, there are some wonderful furniture and home accessory showrooms in San Jose and Liberia that carry beautiful high-end products, but often with steep price tags. These high end showrooms pop up and disappear frequently, so, when you are ready to look, ask around or do a web search to find the showrooms that are open for business.
Regardless of which usage strategy you select, note that a sizeable number of people from other places move to Costa Rica every year…to retire, to live and work, or to start a business. And, a sizeable number of people also move back home every year. Very few of those who depart decide to bring their household furnishings and accessories back with them. So, as a result, there is a huge supply of quality used furniture, appliances, accessories and other household items – high-end, mid-range and low-end. So, if you’re ok with outfitting your new place with stuff that isn’t brand spanking new, then don’t hesitate to look for these opportunities. Craigslist is ubiquitous and that means it’s used in Costa Rica too. Or, search Facebook for relevant groups which may be used to advertise such sales. Note also…there are furniture showrooms in almost every town where the average Costa Rican goes to buy furniture for their homes.
Find good partners
Regardless of whether you decide to rent out your property or not, you’ll need a variety of good partners to keep your property in stellar condition. You’ll need to find a good housekeeper, a reliable gardner, a prompt security service and possibly partners like an interior designer or a remodeling firm. A top-notch property manager will be able to refer you to reliable partners. Also, remember that MyPlace clients have access to the MyPlace Preferred Provider network of Costa Rica’s best, most reliable and trustworthy home partners. Learn more here.
Get the punch list done
If you build, you’ll inevitably have a punch list…a list of items that you requested your builder to address after the closing. Or, if you buy and existing home, chances are there will be some repair items which may not have been completed prior to the closing (or, perhaps a repair was attempted, but it was done poorly). In either case, make sure to get them done as soon after the closing as possible. It’s often difficult to get a builder or a previous owner to help with anything after the property has closed, but your chances of getting the punch list done are best within the first 30 days post-close. And, remember, you will catch more flies with honey than with vinegar, so be kind and understanding when requesting punch list items to be completed.
Get to know your neighbors
There’s nothing more satisfying (and more interesting) than getting to know your neighbors. Find out who owns the other properties in your development, on your street, or in your condo complex. Costa Rica attracts an amazing mix of people from all around the globe. Not only will you find it pleasurable and interesting to meet people from around the world and from all walks of life, but you’ll pick up on valuable information on your area and you’ll learn from their experiences. Also, if you make friends with your neighbors and trade contact information, your neighbors will go the extra mile to watch over your property when you aren’t there. If you do the same and report any issues to them, you’ll make friends for life.
Do a title check every six months
At MyPlace, we recommend that you check your property title every six months. For the first check, make sure all of your ownership information is correct. For example, are you (or your SA Corporation) accurately listed as the new property owner? With subsequent checks, look for things such as information that has changed but shouldn’t have, any liens or encumbrences that have been placed on the property, a change in assessment value, etc. While it’s unlikely that ongoing title checks will detect any problems, it’s worth one hour twice a year to make sure.
Don’t forget to pay your property taxes and SA Corporation annual fees
Remember to pay your property taxes. You won’t get a mail piece reminding you to pay them. Put a note on your calendar to remind yourself. Ask your property manager how and where people in your area pay their property taxes.
Finally, enjoy your new property. Visit often. Spend time in it. Bring your family and friends. Isn’t that why you bought it in the first place?
Want more tips on how to be a successful Costa Rica property owner? Let MyPlace help you find Your Place in Costa Rica. Visit us at www.myplacecostarica.com.