EPISODE TRANSCRIPT BELOW!
Tracey Brock: Hi everyone, this is Tracy Brock, and we’re here at Real 101. And we’re here to welcome Shae Invidiata from EXP Realty. She is a luxury realtor, impact entrepreneur. And we’d like to say hello and welcome Shae.
Shae Invidiata: Thanks for having me. I’m really happy to be here.
Tracey Brock: Great. So one of the topics Shae and I are going to talk about today is what to be aware of when you’re purchasing in Costa Rica. So for all you sun loving people, what should we be aware of Shea?
Shae Invidiata: Yes, it’s the definitely the buzzword of the last two years and still strong in 2023 is moving to Costa Rica, purchasing, and how do I do that? I would say the number one thing for people thinking about investing in Costa Rica to understand is there’s really no financing available. That’s actually changing as we currently are talking, where the banks are starting to realize there’s a lot of Americans, a lot of Canadians are the two dominant foreign purchasers. And up until now, it’s all been cash. And you’ll still find majority is all-cash purchasing. So, what I tell people is, whatever the cash you have to be allocating, like that is your budget. If you are in a situation or you find a seller that might do what we call as VTB, where it’s a basically seller financing, they’re holding back part of the mortgage on the house, you’re in a, that’s in a more of a lucky position. And it’s also not how we understand mortgages in Canada or the United States where it is a five-year term or a three-year term, that’s renewable, and you have 25 years to pay that off, or 30 years, which is the amortization period.
Typically, a seller, if they’re holding back part of that is going to say that in their three years, they want all of their cash out. So that’s the number one thing to be aware of. And as I shared, if you would have come to me six months ago, it would have been all-cash purchasing. We now are seeing some of the major banks and private lenders starting to entertain foreign purchasing, usually at a higher interest rate. So, the easiest rule of thumb would be whatever the US current mortgage rate is, add 2%, and that’s probably what you’re going to get from an interest rate down there. And it’s typically you’re going to find still 50% is required for a down payment. So, unlike Canada and the United States, where it’s typically 20% that’s needed, foreign buyers are going to be needing at least 50%; in some cases, still a little more.
Tracey Brock: Okay, so you’re saying the financing is actually coming from Canada and not from Costa Rica?
Shae Invidiata: It’s actually both. Right now, there’s two major banks in Costa Rica that are just– Like, literally, I feel like I could almost say that it’s starting right now. Because it’s so brand new that you’re hearing about there’s a bank called BAC down there, that they are starting to extend this 50% financing. Scotia Bank, which is not Canadian owned, they have given them the rights and the licensing to use the brand. And so that’s a misconception for Canadians. We come down and we go Scotia Bank, I know that bank, and you walk in and you think at Scotia Bank, but it’s not at all. But nicely the teams in Scotia Bank in Canada are communicating and working across borders with the Costa Rican owned Scotia Bank. And they’re starting to extend financing as well. So, it’s happening, but buyers should not be going into the country with the expectation that they’re going to be able to obtain financing. The safest route is to first go: “This is the cash I have. So this is my budget.” And then if you can obtain financing, that becomes a bonus day. That’s extra money in your pocket.
Tracey Brock: Okay, so yeah, so getting financing from either refinancing their properties that they have in Canada is a better option, makes it an easier process, I guess it’s what you’re saying.
Shae Invidiata: Yes.
Tracey Brock: Okay. So, who do you trust when you’re in Costa Rica? Do you need a realtor down there? Do we just go down and say, “Hey seller, we want to purchase your home?” Or is it better to deal with a professional?
Shae Invidiata: Well, I think, in any industry, not just in real estate, it’s always better to deal with somebody who specializes in that industry, somebody who is a professional in that area. Costa Rica is a little more of the wild-wild-west, meaning you don’t have to have a license to be a realtor. And so you could be at a restaurant, having lunch, having dinner, and somebody can tell you about a property and all of a sudden, they’re also a realtor. And so you do need to– And that’s a real story. Like that does happen.
Tracey Brock: That happens, okay.
Shae Invidiata: Absolutely. Because there’s no regulations. You really want to make sure that you are choosing to align and work with an agent who is coming from a credible brokerage, or at least a credible group, that they really do know the proper things that need to go forward for like the due diligence. It’s very different than how we operate in Canada. So, yes, definitely, you want a trusted source. I’ve been working down there for over 10 years and have amazing agents all across the country. So, even if it’s not like in my area, I’m always happy to help anybody. But I’m happy to make introductions for people throughout the country, so to make sure that you’re not worried about who you’re speaking to.
Tracey Brock: So you do. There’s similar to in Canada. There are specific areas that realtors try to focus on, or professionals try to focus on, and keep in touch with, so you’re not just selling anywhere and everywhere in Costa Rica. You want to make sure that you’re getting the right person in the right area.
Shae Invidiata: Oh 100%, yeah, definitely. Costa Rica sounds a lot smaller than it actually is.
Tracey Brock: It’s does.
Shae Invidiata: Yeah, most people think and oftentimes people say, “Oh, on the island.” I’m like, “It’s not an island. It’s part of Central America. We’re on the land.” But again, people just have this conception that it’s a super small country, it’s an island. Neither of those things. Even though it’s not massive landmass, but going back to what you said, you definitely want to make sure that you’re dealing with a person who’s specializing in an area, because some parts of the country are 12 hours apart. So there’s no way I could know properly that market being so far from it.
Tracey Brock: Right. Is there an MLS system or some kind of way to search up listings?
Shae Invidiata: Yeah. So again, it’s part of the wild-wild-west. There is no MLS system. Even though, most people are surprised to learn that New York is not on an MLS system. The UK doesn’t have an MLS system. So, there are still sophisticated ways to be able to obviously trade in real estate. But again, it goes to more of the importance of making sure you’re choosing a realtor that is an expert in the area, is trusted, because they’re going to be very dialed in with the product that’s available, but more importantly, what the value is, what the historical value of that property is, and making sure you’re not overpaying something. And you could very well have that happen if you don’t have an agent who is very seasoned and has been doing this for a long time, because it’s not like, “I could go on MLS right now.” You could ask me about a property five hours away from Toronto.
And I could at least pull the history to see where the trends are going, how much it was paid for five years ago. We don’t have that ability in Costa Rica. And so there’s different, obviously, groups and WhatsApp chats and community portals between realtors only, where they’re sharing their new inventory that’s coming on. But when you’re with one of the bigger companies, I will say, they’ve got great websites that have up to date inventory. And so that’s usually who I would also say, that’s who you want to go shopping with when you’re looking for a property down in Costa Rica.
Tracey Brock: So, I love Costa Rica. And I’ve always wanted to visit and I did notice that you have a course on Buying Real Estate in Costa Rica. And I just wonder why you created this and who did you do it for.
Shae Invidiata: Yes. So, thank you for that. It’s a great. It is a good course. It’s a 12 module, basically going through everything you need to know before you purchase or move. Maybe you’re not going to purchase and you’re just looking to rent. But my course goes through both scenarios for both type of people. Because when I first moved there, for maybe some people that don’t know, I’ve been in real estate basically my whole life, but I’ve been practicing and licensed for about 13 years. And being an investor in Canada and then going down to Costa Rica, I purchased two places myself. I ended up making the full-time moved down there for a good two years basically. And I was getting inundated with all kinds of questions from people around: “What are taxes like, health care, school system? Can I bring my pet into the country? What is the immigration process? How do I become a permanent residency? Is it safe? What are the hospitals like?”
All of these questions, and these are all very important that you really should know before you’re moving somewhere or before you’re making a huge financial investment or commitment. And so I just decided, I’m going to create a product, I’m going to create a course that you can go at your own pace, I give you all kinds of like checklists in it as well, so that you can go off and be like, “For immigration, there’s like 30 different things you basically need.” And I put it all together in this course, so that you can refer back to it. Like I said, go at your own pace, but then also have all of the forms/checklists that you need. And I’ve just found people have said it’s very, very helpful. And also making you think about some things that maybe you would not have been thinking about prior to moving. And, of course, I share with you things like I wish I knew. So, I have gone through my own call it blood, sweat and tears.
Tracey Brock: Yeah, that’s always better.
Shae Invidiata: Yeah, it’s always better. So, I thought I tried to save somebody else that and share just what I’ve learned through the process.
Tracey Brock: That’s great. Well, I’ll be sure to make sure that we include that. And I will be definitely looking at it as well. So thank you. What do you think would be, there’s still deals to be had? Is it should be people thinking high, low? Like, what do you think?
Shae Invidiata: For the entry point?
Tracey Brock: Yeah, the entry point.
Shae Invidiata: So, it’s changing. A couple of years ago, of course, it would have been a little bit more favorable. And the last few years, we’ve really seen growth in the market. There’s so much more happening around pre-construction right now as well to keep up with the demand of foreigners coming into the country. But you are still– There’s still a lot of opportunity in Costa Rica, where you can get into the market, I say, comfortably without needing to do renovations, painting, like putting what I call like lipstick on a property around that $400,000 mark. It’s gonna get you something that’s just around 1500 square feet, two bedroom, two bath, depending on where you are. That number might have to go up, or it could go down, or moving from like a small house to a condo size property. But I say $400,000 starts to kind of get you into the market. If you have up to about $600,000, you’re gonna have so much more flexibility, a lot more variety, and being in some of those more desirable locations, if you will, closer to the beach, more amenities, as well. So, between that kind of $400,000 and $600,000.
Tracey Brock: Are these communities more like gated communities where when you’re not there, there’s somebody there making sure your property is still being taken care of, there’s maybe a pool or something like that, other things like restaurants around that are accessible to everybody.
Shae Invidiata: For the majority of them, they are. There’s a lot of different gated communities. There’s also just like free-standing. I’m going to call them like expat communities where it’s just kind of known that there’s like newer homes, development that are people are coming and they happen to be up in the mountains. And some of them, like I said, are gated; some of them aren’t. You can also have property managers. That’s very common in Costa Rica. I would say the majority of expats who are not living there full-time, they would all have property managers just to make sure– Like, moisture is a really big thing in Costa Rica as you can imagine. And if you’re more in the south where the rain, of course, just moisture, so you do want somebody who is maintaining the house for the sea salt damage that can happen, mould buildup that could happen if they’re stagnant. But you’re got so much different variety that is available to people in Costa Rica, whether you do want to be in that gated community or you want to feel like you’re more in the true Costa Rica, if you will, up in the mountains.
Tracey Brock: Alright, so if people are looking to buy, can they contact you to get some information?
Shae Invidiata: Absolutely. They can contact me and depending on where you are looking, if I’m not the right person or it’s not my area, then I would be happy to introduce you to who is. But we want to make sure that you are taken care of and feel confident when you are looking to purchase down in Costa Rica.
Tracey Brock: Well, that is great information and we really appreciate your time today. So, thank you. If anybody has any questions or would like to contact, Shae, we will have all your contact information within this podcast. Thank you, Shae. And did you have anything, last things you wanted to say?
Shae Invidiata: Thank you for having me. I should say [NE 15:01].
Tracey Brock: Yeah. Oh that’s a good question, just as a side note. Do you need to be bilingual to go down there?
Shae Invidiata: You do not. Majority of the locals even if you’re in a remote area, you will be surprised that they actually do speak, at least enough English to get by or like help you out. But I always encourage people to learn some Spanish when they are down there and the locals love practicing English on you and you can practice your Spanish with them.
Tracey Brock: Great. All right. Have a great day and thank you.
Episode Hosted By:
Tracey Brock – Mortgage Broker M09001257 Dominion Lending Centres
Shae Invidiata / Philanthropist/Entrepreneur