Take our Costa Rica Developer Quiz and find out about the quality of each real estate developer and his product before you purchase.
Are you looking to purchase a property in a real estate development in Costa Rica? No matter if it is in pre-construction or while construction is going on, do yourself a favor! Make sure you do your due diligence on the development. This Costa Rica developer quiz is the perfect tool for this.
After the real estate boom in Costa Rica, many investors and developers went on their face and lost their money, just like anywhere in the world. Costa Rica is no different and with a different culture and a different language, someone who speaks our language we automatically trust.
Therefore we have decided to give you this tool to assist you in deciding if you should purchase a property from a real estate developer or walk away.
This FREE Costa Rica Developer Quiz is a gift to you from the American European Real Estate Group in Costa Rica.
Before you start our Costa Rica Developer Quiz, find out as much as you can about the area surrounding the development you’re investigating.
Questions for you
- Is the road toward the development paved?
- If not, will the developer pave it or the municipality?
- What is the security the paving will happen?
- See how the locals behave toward foreigners
- See what amenities, stores, churches, hospitals etc. the area offers
- Where is the closest doctor or clinic?
- How is the weather during the year around? Does it rain much or very little?
- Does the area or the development flood during the rainy season?
- Is there a river on or near the property, can that river flood your property?
- How is the beach? Is it clean?
- Can you swim in the ocean or are there rip tides?
- And the million dollar question: will it be easy to sell again?
The Free Costa Rica Developer Quiz
Gate / Entrance
There is all kind of gates, some secure and some not.
Remote controlled +1
Guard controlled +2
Guard & Visitors controlled +3
(1 bonus point for separate access for visitors than for owners)
Gravel + 1
Gravel is only customary in agricultural zoned developments.
Black & Grey Water
Nowadays the law obliges to a water treatment plant, depending on the size of the community.
Nothing available 0
Septic tanks for each lot/house +1
Water Treatment Plant +2
No one can build without nor can you live without water
Rural water +1
Private water well +2
City water +3
(1 bonus point for community reservoir and pump system)
No one can build without electricity.
To the development +1
To the front of lot +2
Subterranean to lot +3
One landline +1
Cell phone reception +2
One landline + good cell phone reception + 3
Is the development too remote to get internet?
ICE/Kolby + 1
Parking assigned or titled
Some developers will have a separate title for each parking spot and others have them included in the common areas, which is very important in the pricing of the property.
Space in parking lot +1
Assigned space or own garage + 2
More than one assigned space +3
(for ample visitor parking add 1 bonus point)
Homeowner’s Association Bylaws available
In Place +2
Is the percentage of condo fee for each property and the description of what the condo fee includes well described in the bylaws?
Does the developer have their financing in place
Most developers in Costa Rica need to show at least 40% of their project pre-sold to get their financing.
Does the developer charge in different phases
This shows how much financing the developer has and therefore need your money or not.
10% Reservation money +1
20% Earnest money +1
Rest paid in Phases +1
Only 30% down, rest at closing ¬+6
Can the buyer withhold 10% of the balance until after the home inspection?
Can the buyer withhold 10% of the balance until the whole project is delivered?
Option to Purchase – sale agreement
Does the option to purchase describe what will happen with your money if the developer does NOT finish the project?
Where does the earnest money go
Costa Rica does not have escrow laws
Directly to developer 0
Developer’s attorney escrow 0
escrow service + 1
An escrow account with your attorney +3
Does the developer speak Spanish himself
This is a major issue since the language barrier can mean that too many mistakes can be made because of it.
Did the developer do other real estate projects
Developing a real estate project in another country does not mean that the developer knows what he is doing in Costa Rica
In another country +1
In Costa Rica +3
Does the developer have experience in completed projects
One project +1
Two or three projects +2
How long has a developer or company been in business
A longer track record can mean more responsible management
0 to 2 years +1
2 to 5 years +2
5 or more years +3
Are there people on the website under “about us”
A red flag for scam sites is that no names are given.
Only staff +2
Developer too + 3
(add 1 point too either with photos or detailed biographies)
Is there a Physical Address on the website + 1
A red flag for scam development sites is that they don’t want you visiting the real estate development site on your own.
Are there Costa Rica phone numbers on the website + 1
You should be able to reach someone on site if people are living or building there or even in the local sales office.
Financing of the purchase
Banks will not offer buyer’s financing in shaky developments.
There is no financing available 0
The developer is giving buyer’s financing +1
A bank is giving buyer’s financing +2
Are locals (Ticos) buying in this development +1
Over 55 points are excellent, your prospective new home is being developed by a real professional and your earnest money will be relatively safe.
35 – 54 points are very good, you always have to be careful but your analysis shows that the developer is on the right track. I would score many developments by reputable developers at 36.
20 – 35 points are good, but you are entering into a gray area. In all likelihood, you are dealing with a development in the pre-construction phase where points cannot be given for infrastructure. In this case, the developer’s experience in Costa Rica and reputation become more vital. You can judge this part and add in the theoretical points for infrastructure if the developer follows through in order to make your decision. You should be getting a good pre-construction discount, so check prices in the surrounding area for comparison.
Below 20 points are speculative. If you believe in the developer’s vision and can afford to lose your money on a speculative bet, well that would be your decision. You should be looking for extreme pre-development discounts and don’t be fooled by a smooth sales pitch or hype. Visit the development and see the situation on the ground before committing your hard-earned cash. You should carefully analyze the true prospects for growth in the area and the developer’s capacity to come through. This free Costa Rica Developer Quiz will help you learn all the ins and outs.
Important notes about developments
Developing property is not easy in Costa Rica, especially getting all the permitting in place, which is the most difficult part and can take years. This is very costly and entrepreneurs who have no construction or development experience run out of money before they get the project off the ground. This is where your investment is at stake and any developer as well as the prospective buyer, are faced with a bit of a catch 22. Our Costa Rica Developer Quiz shows you exactly what to be aware of.
Contact Ivo NOW for more information.
The Author, This Costa Rica Developer Quiz was originally written by Russ Martin, marketing manager of the American European Real estate Group quite some years ago and updated by Ivo Henfling.
Feel free to leave your comments on this blog. If you like this article, please feel free to share it on your social media.
If you like this blog, connect with me on Google+ or subscribe to our newsletter by clicking the banner below.
While we’re at it, I DO want to remind our readers that we appreciate any referrals you can send us. Finally, please remember the American-European real estate Group’s agents when you refer a real estate agent. Because we DO appreciate your business.