A couple of decades ago Costa Rica was near the top of the list for almost anyone interested in a second home in the sun. Then things started to change. Prices rose, the bureaucracy became stifling, and the country abandoned its famed pensionado program that provided financial incentives to foreigners on a fixed income.

Today the situation is improving, especially in the beautiful Central Valley. Prices have moderated throughout the country, though cars and some other items are still unreasonably expensive. The bureaucracy is far from streamlined, but it’s forging ahead with transportation improvements as well as reformed property rules that will make title searches more efficient. The pensionado program hasn’t been reinstated, but all these changes have helped residents in other ways. You can now live in a growing number of inexpensive areas that were once too remote to consider before highway and airport improvements. And if you want to apply for residency, you can now make the application in your home country.

As for real estate prices, they’re relatively high by Central American standards, but prices in the Central Valley haven’t risen nearly as much as they have on the country’s coasts, particularly the fashionable North Pacific.

Throughout Costa Rica, the cost of living is moderate. The leading expatriate organization, the Association of Costa Rica Residents (website: www.arcr.net) , estimates that a couple who owns a house and car and has no debts can live comfortably on $1,500 to $2,500 a month.

Costa Rica has some of the best-preserved countryside in Latin America-acre upon acre of pristine forest and jungle. And there are long stretches of deserted and undeveloped beaches, on both the Caribbean and the Pacific coasts. The country’s vast national park system has the effect of stabilizing property development and attracting thousands of eco-tourists who contribute to the economy.
A diverse land

Though Costa Rica is small-about the size of Vermont and New Hampshire combined-it has a huge variety of environments. The country is divided by a ridge of volcanoes and mountains. It is part of the Pacific "Rim of Fire" and has seven of the area’s 42 active volcanoes plus dozens of dormant or extinct cones. Small tremors shake the country from time to time-the last major quake was in 1992. While most areas along Costa Rica’s two coasts are hot and muggy, the Central Valley has a pleasant climate with daytime temperatures generally in the 80s.

All these advantages are in addition to a stable government, a well-educated populace, and some of the world’s most enjoyable activities-sport-fishing, bird-watching, scuba diving, snorkeling, kayaking, surfing, and horseback riding. And, of course, there are many opportunities to dine and dance under the stars at the beach.The drawbacks to Costa Rica are straightforward. One is the rise in property prices over the last few decades. The second is the capital, San José, which is noisy, rundown, crawling with pickpockets, and often reeking from garbage in the streets.Despite the rise in real estate prices, it’s still possible to find a second home in Costa Rica for a fraction of what you’d pay in North America. You just have to look harder. And while San José has problems, Costa Rica as a whole is one of the safest countries in Central America. The country’s Central Valley continues to attract Americans and Europeans who value gorgeous landscapes, a good climate, and an established expat community.

If you’re considering a second home in Costa Rica, you should be aware that the country’s healthy rental market means you can live in a house for part of the year and have a good chance of renting it for the remainder. A $165,000 condo in Tamarindo on the Pacific Coast, for example, recently rented for $1,000 a month; a $450,000 house near San José rented for $1,800 a month.
Look beyond the capital

About two-thirds of Costa Rica’s population lives in the Central Valley, a plateau, as its Spanish name-Meseta Central-suggests. While coastal areas are typically hot and muggy, especially during the rainy season, the Valley’s altitude of 3,000 to 5,000 feet makes it comparatively cool year-round.

San José, Alajuela, Cartago, Heredia, and several other major cities are in the Central Valley, which covers a land area of 3,500 square miles. San José, in fact, was an insignificant village until 1824, when the country’s first elected head of state decided to move the government from the colonial capital of Cartago to San José.

Today, the decision might sound like a mixed blessing. While moving the capital symbolized a fresh start for the country, it also created a city without much of the Spanish colonial architecture that makes many other Latin American capitals so elegant. The Central Valley, however, has many smaller towns that are known for their beauty and charm, including Sarchi, Grecia, Zarcero, and Orosí. The many Americans with second homes in the Valley enjoy going to art galleries, handicraft shops, boutiques, bars, restaurants, flower markets, and friendly village churches.

The area also has excellent hotels and medical facilities, and it’s the site of the country’s major American school (the Country Day School in Escazú, near San José) and the Juan Santamaría International Airport, 14 miles from San José.

Not far from San José is the Parque Nacional Volcán Poás, site of Poás, the most active volcano in the country. Visitors to the park can watch the crater bubbles and steam gush out of the volcano. No major eruption has occurred in many years, and scientists can usually spot early warning signs when danger threatens.

One expert on the area, Christopher Howard, says the expat lifestyle in the Central Valley is different from what it is in many other Latin American countries. In the Valley, Howard says that expats from the U.S., Canada, and Europe usually don’t live among themselves in isolated "expat communities." Except in a few towns such as Escazú, most expats buy property in areas where neighbors are predominantly Costa Rican.

Howard, a big booster of the country and author of New Golden Door to Retirement and Living in Costa Rica, says that many expats are now looking to Central Valley towns to the west of San José, including San Ramón, Grecia, and Atenas. The towns are within easy driving distance of the international airport as well as the Pacific Coast.

Atenas, for example, has a population of fewer than 20,000 (including its sprawling suburbs), but the area is known for being safe and clean. Atenas, like several other towns in the Central Valley, has health and fitness centers, swimming pools, tennis courts, excellent restaurants, dentists, physicians, many fascinating shops, and one of the best street markets in the country.
Something for everyone

Though you can spend several million dollars on a residence in the Central Valley, the area also has real estate that appeals to budget-minded shoppers. Some recent property listings in the Central Valley:

A 500_square_foot country cabin on an acre of land in the hills near San Ramón. The small A_frame house, only 10 minutes from downtown San Ramón, has one bedroom and a balcony upstairs and a living area, kitchen and bathroom downstairs. Price $50,000. Contact: Dale Johnson, American_European Real Estate Group, tel. (506)269_7856; website: www.american_european.net.

A 1,200_square_foot, two_bedroom ranch_style house in Atenas. The residence, bordering a beautiful stream, has a tiled kitchen, a light and airy living room, two bathrooms and a covered patio. Price: $117,000. Contact: Go Dutch Realty, tel. (506)446-4204 and (506)838-4683; website: www.godutchrealty.com. A charming two-bedroom, one-bathroom house in the San Isidro suburb of Grecia, one of the friendliest towns in the Valley. The 1,200-square-foot house has a dining room, laundry room, living room, and terrace. Price: $140,000. Contact: Go Dutch Realty, tel. (506)446-4204 and (506)838-4683; website: www.godutchrealty.com.

A three-bedroom, two-bathroom house in a secure development in the mountains west of San José. The 3,500-square-foot house has a dining room, family room, living room, and terrace. Price: $160,000. Contact: Costa Rican Real Estate Group, tel. (506)272-4349; e-mail: Search@TheRealEstate.net; website:www.TheRealEstate.net.

Recently built 1,500-square-foot condominium in Cariari, a block from the Cariari Golf and Country Club and 20 minutes from San José. The residences have two bedrooms, two-and-a-half bathrooms, a dining room, kitchen, living room, and balcony. Price: $185,000. Contact: Go Dutch Realty, tel. (506)293-8250 and (506)870-8877; website: www.godutchrealty.com.

A luxurious 3,230-square-foot house in a secluded, gated community with beautiful mountain views. The house, adjacent to a private golf course, is 15 miles from San José. It has a spacious living/dining room, a large covered terrace, three bedrooms, four bathrooms, laundry room, service quarters, and a two-car garage. Price: $450,000. Contact: T erratica.com Real Estate, Building "Belén Punto de Encuentro" Second floor, office # 6, San Antonio de Belén, Heredia; tel. (506)293-1515 and (506)879-7979; website: www.terratica.com.

Six things every buyer should know

1. There are no restrictions on foreign property ownership. However, no one can own property within 165 feet of the ocean, and for the next 500 feet, real estate comes under Maritime Zone laws. These laws permit development only under government "concession." This means that anyone shopping for property should be doubly cautious about buying oceanfront real estate, including condos. Before entering into a transaction, insist that your attorney assure you that the title is legally consistent with the concession laws.

2. Title issues. Though Costa Rica’s property regulations are steadily improving, some buyers still wind up with real estate that has a lien or title that can be challenged. For that reason, it’s also essential to have your lawyer make a thorough title search and to assure you that when the transaction is completed, you will have a clear title to the property. First American Title Insurance Company provides title insurance in Costa Rica. Contact: First American Title Insurance, Caribbean/Latin America Operations, 13450 W. Sunrise Blvd., Suite 300, Sunrise, FL 33323; tel.( 877)641-6767, website: www.firstam.com.
Never rely on a seller’s assurance or retain an attorney recommended by the seller. Instead, choose your own attorney, one with specific experience in real estate transactions and title searches. To find an attorney, ask for recommendations from your U.S. lawyer, Americans living in Costa Rica, or members of an expat organization such as Association of Costa Rica Residents, tel. (506)233-8068; website: www.arcr.net.

3. Residency requirements. Depending how often you plan to visit or live in Costa Rica, it can be necessary to establish legal residency. (Tourist visas are valid for 90 days.) Many owners of second homes choose either pensionado or rentista status. For pensionado status you must show proof of monthly income from a qualified pension plan or Social Security benefits of at least $600. For rentista status you must show proof of at least $1,000 monthly income as well as evidence that the income will continue for the next five years.

4. Financing. Many owners and developer will finance up to about 70% of your real estate purchase, as will a few international banks in Costa Rica. The rate is usually about two or three points above what you’d pay in North America. The best move is to consult with your U.S. banker, accountant, and/or tax adviser before deciding on how to handle financing.

5. Costs at the time of purchase. These include a transfer tax, public registry fee, notary charges, and a variety of other fees. The American-European Real Estate Group estimates that total closing costs on a $100,000 transaction will run about $1,836. 6. Property taxes. Whatever you pay in North America or Europe, the property tax in Costa will almost certainly be lower. The current annual rate is 25% of the recorded value, which is nearly always lower than the actual value. If a house costs $200,000, for example, you would pay only $500 a year even if that were the actual recorded value. In practice, it would generally be much less. In Costa Rica, property taxes are usually paid quarterly. IL

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