Steps in Costa Rica Real Estate Investing

With all the stories of people making tremendous amounts of money in real estate it´s no wonder why so many are looking at Costa Rica real estate as an investment vehicle. It offers more security than the stock market, provides great potential returns, offers tax benefits and let´s not forget; it sounds cool to be ´in real estate´... right? Everybody can buy and sell stocks from their phone or computer these days. But Costa Rica real estate... now that´s something else!

One of the challenges many Costa Rica real estate investors who are just starting are faced with is putting up the money to acquire a piece of Condo or property. Although in reality this is usually not the biggest obstacle. You might say "Hey, what do you mean, not an obstacle. I would love to invest in Costa Rica real estate, but I just can´t afford to!"

The point is that hardly any Costa Rica real estate investor who buys a piece of real estate has enough money in their account to pay for it!

That´s where educating yourself in creative financing techniques comes in. The key here is that you really don´t want to "own" or "buy" the property -- what an experienced Costa Rica real estate investor does is simply "control" the property until he/she exercises an "exit strategy"... in other words, decides what to do with the property. The following are just a few of the ways you can control a piece of Costa Rica real estate without actually buying it, and with little to no cash out of your pocket:

• Control property by "Subject To" financing - this strategy is the best because the seller actually deeds the property over to you! What better way to control real estate!
• Control property through a straight option - this strategy is good if you can´t get the seller to agree to a "subject to" deal. The option gives you the exclusive right, as well as the flexibility, to either buy the property, sell it or sell your option to another investor!
• Control property through a lease option - essentially the same as the straight option except that you also control the property by leasing it from the seller, but still have the exclusive right to either buy the property, sell it or sell your option to an other investor at the end of the lease term.

Now if you´re still not ready to tackle the above, why not buy your own home, condo, lot as a way to get started in Costa Rica real estate investing? Now "owning" your own home may sound like a somewhat obvious way to get started in real estate, but it is also a very good way to do so.

Apparently this little step is overlooked by a lot of people. Just take a look at how many people are still renting a property instead of buying one. Now of course the relation between rent and housing prices varies from country to country and even from area to area. But wherever you go you will still find people renting, because in their mind "they don´t have enough money to buy a house." In reality it would be much cheaper for them to buy!

When you rent, you are pretty much flushing your money down the toilet. Of course you are getting the pleasure of living, but the point is you´re not building anything long term. Every dollar you spend on rent is a dollar you will never see again. Whereas if you own your own home, instead of paying rent you would be paying for your mortgage. Even though there is a lot of variety in mortgages these days, the basics of practically all mortgages are more or less the same.

Every month you make a payment which consists of two parts: interest and principle. The interest part can be compared to rent. Those dollars are gone with the wind and you will never hear from them again. However, the part of the payment that goes to the principle is money you keep. Every dollar that is used to pay off the principal is a dollar you put in your own pocket!

So if you´re thinking about getting started in real estate and you don´t "own" your own house yet... change it! Get some experience "owning" real estate. It´s a great first step towards building your capital and in many cases, it just makes more sense financially. It can also supply a range of opportunities for accelerating the process of building your net worth. When real estate prices go up, so does the value of your property. Whereas the money you owe the bank, your mortgage, remains the same.

In other words, this helps you build your net worth. Compare this to people that are paying rent... Their net worth does nothing. However their landlord´s net worth is doing very nicely in this scenario and he or she will probably love you for it. So if you get a warm fuzzy feeling about making somebody else rich at your own expense... Keep renting. If you would rather build your own capital instead... Buy your own house!

Many home owners have accumulated more money through appreciation of their property than by working a full time job for many years. Now before you go out and buy the first property you lay eyes on, don´t forget that some security measures are in order here. As you may or may not know, real estate prices do not always go up, and certainly not in a straight line. Yep, this can be shocker to some people, as well as an ugly reminder for those who overlooked this minor detail in the past. If for some reason you would have to sell your home in a down market, it can be a costly adventure. You wouldn´t be the first to end up with a house worth considerably less than the mortgage resting on it. So make sure to keep some slack.

In the long run Costa Rica real estate prices have always been on the rise, but in any cycle there are down periods. By keeping some slack and being patient you will be able to sit through these times and profit from the long term up-trend.