161 Where is Guanacaste Real Estate going in the next 12 to18 months

[Richard Bexon]
Good afternoon, Jill.

How are you doing?

[Jill Reed]
I'm doing well, Richard. How are you? Nice to see you.

[Richard Bexon]
Yeah, good to see you again. Good to see you. I appreciate you coming back on the podcast as well.

[Jill Reed]
Thanks so much for having me. I always enjoy coming on.

[Richard Bexon]
Awesome. Awesome. Well, the first question I'd love to ask everyone is, you know, just to kind of get an idea of what's happening in the market.

You know, we've got rising inflation rates, you know, kind of all around the world, except Costa Rica, which is really weird. It's just been reducing. You know, we've got slowing economies.

And how have you seen that hit Costa Rica? And specifically, how have you seen that hit Guanacaste real estate market?

[Jill Reed]
Sure. The Guanacaste real estate market, I think, as you're fairly familiar with the real estate market out here at the beaches, stays pretty steady. You know, we had been in a nice little boom there for a couple of years post COVID.

And I think this year in 2023, we've seen a little bit of a slowdown. But things are still moving. And I will say the rising interest rates have certainly come into play, particularly for clients that we used to see who would take out a second loan on their home and purchase real estate down here, HELOC loan.

And we're seeing that again, actually, with some improvements in the rates back in the States. We just had a client like two weeks ago go through that process to take out a second loan on their home and purchase property down here. So we're starting to see it tick back up just a little bit.

I think people are realizing that the rates, although they are creeping up, in some cases are coming down slightly and may or may not improve as a whole. So it might be time to move.

[Richard Bexon]
Yeah, I mean, there was a discussion today just kind of about the Fed holding the rate currently over this next cycle. But we'll find out pretty quickly. But I mean, even when comparing again, we've got one thing happening in the market here that we've just not seen before, which is that finance available and its ease here in Costa Rica with BCT, Banco Lafiste, back San Jose, even though the process is laborious.

But you can get nine, nine and a half percent, 10%, which is typically not that bad for Costa Rica.

[Jill Reed]
No, if you had asked me two years ago, if I had a client who asked me, can I purchase property here on a loan? I would say, sure you can, but you're going to be paying 13 to 15%, depending on which route you choose. And at that point in time, it was really just a lot of private loan money.

But now we're seeing just entering into the market, particularly in the last six to 12 months, as you've noticed with BCT and Lafiste, as you pointed out, offering loans to non-residents, which has been awesome. I mean, we've been able to work with people just to carry them over that final edge, to get to the finish line, to purchase that property down here. Sometimes they need just a little bit.

And that loan here really helps with that process. And I don't know about what you're seeing necessarily, but our work with these banks has been pretty easy. It definitely is a little bit longer of a timeline than you would see typically in the United States, but it does work out and it does go rather smoothly for our clients.

So we've been so excited about that. And in addition to that, I don't know if you've worked with Volo or not, but Volo Loans is out of Utah in the United States, and they are giving home loans to US citizens who are buying property here in Costa Rica. And they're also offering very competitive rates, as you said, down in that eight and a half to 10% area.

And they've been awesome to work with as well. And they're also super efficient and super quick. So they've got a little bit of an edge over the Costa Rica banks.

[Richard Bexon]
We might have to get someone from Volo Loans on this.

[Jill Reed]
You should. Tyler, he's great. Super responsive.

[Richard Bexon]
I'll have to hit you up just because I love getting that in. I mean, that's the interesting thing about the market. I mean, it's only recent that financing has really become part of the market here.

And I think that's going to make it a little bit more dynamic than it was before. But I mean, thinking about the next 12 to 18 months in Guanacaste real estate, do you think it's going to become, it's going to turn to more of a buyer's market? Because I mean, it was a seller's market over the last two years, right?

Would you say? Yeah, for sure. Do you think we're going to see a move towards more of a buyer's market?

[Jill Reed]
So I think we have seen a slight shift to a buyer's market just in the past four months or so. You're seeing, whereas in a couple of years prior, we were seeing more buyer covers all closing costs. We're now starting to see a move back to a split, a 50-50 split.

And that's just an indicator of it being a slight shift toward a buyer's market. And I think that could probably last through our green season, but I feel like we are on the edge, and you're talking about the next 12 to 18 months, and I'll touch on that briefly. I think that we're on the edge of a real big boom again.

I feel like we're going to see, and not necessarily prices tick way up like they did post-COVID. I think where we have landed is kind of a correction, and I think we'll tend to stay there, but I think we'll see an influx of buyers into the market. Because there are a lot of things going on, I think you see a lot of things happening in the world.

The world is changing. People are working from home. It's easier to move to a foreign country and bring your whole family.

We're also getting ready to go into an election year in the United States, just north of here. And so that tends to bring crowds from both sides of the table down to Costa Rica to start looking into property here. And just as an indicator for us, our website is seeing an uptick in traffic.

And we're seeing more clicks. We're seeing more imprints. We're seeing more subscribers.

And I think that just tells us that we have a lot of interest out there and it's building.

[Richard Bexon]
Yeah, I mean, I've certainly seen that on the podcast downloads as well. I mean, it's great to see the interest is certainly there. I mean, our business is not slowing down.

I do know that some real estate companies in Guanacaste have seen definitely a reduction in the amount of inquiries coming through. But I think it's just we're seeing a change in the market beforehand. There was a lot of people post-pandemic that were making lifestyle investments, as I like to call, they wanted a place in the sun, something that they could also rent.

Whereas what we started to see transition over the last probably year is more people looking to relocate and investors as well. It's an investment market down here, especially as they don't know where real estate's going in the US. Here, it's just a steady market.

The returns may not be as good as some commercial investments, but it's just a very steady market that we have here.

[Jill Reed]
It is definitely a steady market. I agree with you on that front. And particularly what we're seeing out here on our beaches with the development, it's just constant.

And we also are seeing that Costa Rica recognizes that and that they're investing in infrastructure and they're investing in time and energy and money and resources out to this area as well, because they obviously see the benefit in the long-term. And I think that just helps with bringing investors to the table.

[Richard Bexon]
Yeah. I had a friend, he was kind of an acquaintance that then became a friend. We were just chatting about long-term rentals, but he says that there's never been more long-term rentals available.

Like two years ago, there really wasn't that many. Now, we see a lot more long-term rentals available in the area, which could be very good for people as well, just because I think some of those people that came for a year have now gone back. But I think anyone looking to kind of make that move and maybe try and rent something before that they buy, or maybe buy and kind of rent something, that market is kind of changing a little bit there as well.

I don't know whether you're seeing the same, especially because you're in Hacienda Pena. I'm sure that you've certainly seen some things going on.

[Jill Reed]
Yeah, for sure. As you know, here in Costa Rica, we sort of live and die by our group chats. And we have group chats here in our neighborhood, and we have group chats just outside in the general area, and then for your kids schools, and then for your exercise group, et cetera, et cetera.

And I have never seen what I have been seeing recently, which is, as you mentioned, a huge uptick in long-term rentals. The availability. I used to have people call me a year and a half, two years ago, looking for long-term rentals.

They had been looking all up and down the coast from Potrero all the way down to Avellanes, even Playa Negra, and they weren't finding things, and they were willing to take whatever was out there. I mean, even if it was 45 minutes from the beach, they were still like, well, if it's there and they'll take me and my kids and my dog, I'll do it. And now we're seeing things that are desirable and affordable, which is another huge problem we were having a year and a half, two years ago.

We're seeing some things that are more affordable.

[Richard Bexon]
Yeah. I mean, I think a lot of people that came down, they only came down for maybe a year or two years and kind of like have now returned or gone off somewhere else. But I think that that opens a market for a lot of people looking to relocate here, and maybe that aren't looking to buy or don't have the funds yet, or are going to wait for something to happen in the US in order to sell their assets, to come down and kind of try before you buy as well.

So I think it's a good thing just because again, that long-term rental market was insane. It was ridiculous.

[Jill Reed]
Yeah. It was awful. I mean, let's not mince words.

It was really not fun, but now it is definitely a little bit easier. And that's kind of, I think those are words of wisdom that you just said there, Richard, is taking your time, actually coming down and saying, well, we want to move to Costa Rica. Great.

That's awesome. But maybe you should take some time and live in an area and make sure that it has the resources that you need and that it fits your lifestyle before you jump in headfirst. I really think it's a good thing.

And so now that we have these long-term rentals available, I do encourage clients, try it, see what you think, stay for three, six months, maybe even a year you want to rent before you buy, just to sort of try all the different areas around here. So you're here, you're on the ground, you have a long-term rental and you can travel around and see the country for yourself.

[Richard Bexon]
Yeah, I agree. I agree. And because again, sometimes the areas, I mean, I'm going to use Reserva Con Chao, just like living in Reserva Con Chao may seem pretty, but once you realize that there's a resort there, there's two resorts, it may not be what you're looking for, but maybe it is, maybe that's what you're looking for, but it's just a very transient community.

And there is a community in there, of course, but there is also a lot of kind of one week rentals and noise and those kinds of things. So, but I've got people that I know that love living there as well. So you just need to kind of really, you know, try before you buy.

[Jill Reed]
It's a lot of coming and going, right. And I think sometimes that's not necessarily what you're looking for as a family when you're trying to root yourself.

[Richard Bexon]
Yeah, I agree. I mean, what are the markets that you continue to see that are hot, you know, because there is some flexibility and we're starting to see some price reductions in certain areas, but are there any particular markets where you're just like, look, that thing's just going to stay hot?

[Jill Reed]
I don't see a lot of prices going down in Tamarindo proper, in Flamingo, in Las Catalinas. Those are places that are holding really steady. And you mentioned Reserva Conchal there.

That's, you know, that's a pretty safe bet. That's a really safe bet. Hacienda Penilla, the same.

I think that we climbed really high and we've had to come down and have a bit of a correction, just a bit. But I do think that that is still also a very safe bet. And we continue to have development in here that is selling.

So that's a clear indicator that people are invested here and that they feel confident in the value. So those are the markets that I think are still super steady.

[Richard Bexon]
Yeah. Yeah. I mean, I think that when, you know, if markets do contract, they're always going to contract around those focal areas, you know, that a lot of tourists go to because it's going to generate vacation returns.

Whether we like it or not, this country is driven and the coastal market is driven by tourism. You know, if you look at tourism numbers, they'll dictate to you like where to invest, where returns, et cetera. So, yeah, it's going to be interesting.

You know, I'm looking forward to the next 12 to 18 months because I'm starting to see stuff pop up and, you know, I'm personally investing myself. So, yeah, I always say I eat the food I serve up.

[Jill Reed]
Yeah, it's exciting. It's a very exciting time. And I was just doing a market review, a market analysis myself the other day.

And I just, you know, I said, well, OK, so we're in green season, which means we have fewer tourists rolling through. But with that, yes, it's more serious investors. They've done some homework.

So you've got a person who's well-informed, who knows what they want and has money at the ready. They're already ready to go. So the deals can be quicker.

They make more sense. And quite honestly, right now, it's affordability. It's a really great time to jump in.

[Richard Bexon]
Yeah. Well, I mean, I always like to ask people, I mean, because you've been here in Costa Rica a while, when buying property here, what are some of the common mistakes that you see people make and how can they be avoided?

[Jill Reed]
Right. You and I have talked about this before. Do your homework.

[Richard Bexon]
Yeah.

[Jill Reed]
You personally have to do some homework and that is finding out what the process looks like. Now, a good realtor can guide you through that process, first and foremost. But you want to make sure that you have good legal advice and someone who will return your phone calls, someone who will answer your questions, regardless of the time of day, necessarily.

And these people can guide you through the process of buying here. You really have to be careful in that you want to make sure that the property is free and clear. It means it has a title that doesn't have a lien on it.

It means it's a title property in general, that it is ready to go. And also, if you're looking into land, I know you've seen this where people come and buy land and then don't have water, don't have the necessities that they need in order to get a permit to build a house or a commercial property. And then what do you have?

Nothing.

[Richard Bexon]
You have pasture land.

[Jill Reed]
Exactly. So I think those are the things that are tricky about Costa Rica. You don't have consumer protections in place necessarily that you do in your home country.

And so you have to walk very carefully and make sure that you are crossing all the T's and dotting all the I's and discovering all the things that need to be discovered during your due diligence process.

[Richard Bexon]
Yeah. I mean, I chatted with someone the other day that had been in this country for a very long time and he had a large farm and he was like, I'm subdividing it. And I said, well, do you have a SADA there or is the IEA there?

No, no, no, no, no. With artisanal wells, I'll be able to subdivide it. I'm like, no, you can't do that.

The only way to subdivide is if you have a SADA or IEA water. You need that water letter. They won't let you subdivide because you need the water availability letter too to be able to subdivide.

The rules changed.

[Jill Reed]
Right. But as you and I both know, sometimes that happens anyway.

[Richard Bexon]
Yeah. I mean, there are ways.

[Jill Reed]
And then the folks that come in to buy that lot end up in a mess.

[Richard Bexon]
I mean, check your SADA when you buy a property. If you get a water letter from the SADA, I mean, we always check it. We call the SADA up and speak to the president.

Is this a valid water letter? What do we need to know of what's going on? So it's just important to go that deep during due diligence because we've had clients buy, come to us afterwards and be like, Rich, I've got a water letter, but there's no water at my, there's no piping up to my lot.

And I'm like, you need to check this stuff out before you buy.

[Jill Reed]
Yeah. Or for instance, I had a client who wanted to buy a piece of property and they were so excited about the size of the property and they were told, oh, it can be subdivided. I'm so excited.

And I can split it into three or four lots and sell them off. And I said, okay, but how are you going to have access to those lots? And we do our due diligence.

We discovered that the only access is on an agricultural road. Well, you can't, that doesn't work. So it's exciting for a minute until you actually dig a little deeper and discover that you can't do what you want.

So just making sure you can do what you want to do with the property that you're purchasing. And that goes all the way to purchasing a condominium. And can I Airbnb it?

Cause you know, you could have a rule in the HOA that's buried deep down on page 25 saying you can't Airbnb it. And nobody discovered that.

[Richard Bexon]
Yeah. Yeah. Well, I mean, what listings do you currently have at the moment that you think still deliver value, Jill?

[Jill Reed]
So I have a couple of listings that I really love a lot. And I, I think that they bring great value. I, one of them, I, and I wanted to mention this.

I am co-brokering with Matt Rosensteil down in Hoonkeal and it is literally a hundred yards from the beach. You can walk to the beach in 40 seconds or less. It it's fully titled.

It's a brand new house. It is three bedrooms, two full bathrooms, two half bathrooms, a rooftop terrace, plenty of room to actually add a pool. If you wanted to, it's got a huge garage, you could turn into a Casita.

And I think that that house is awesome. And I think the location is killer and I think it will, it will fly very soon. But it it's one of my favorite listings.

It's just a surfer's paradise down there. It's so quiet. It's family friendly.

The other one I have that is just a no brainer.

[Richard Bexon]
How much is the listing on that one?

[Jill Reed]
Oh, sorry. It is listed at $689. That's not bad.

It's listed at $680, not for the location. I mean, it's, it's super close to the beach. The second listing I have that I think is really wonderful.

I am co-brokering with Lauren Manty in Tamarindo. And that one is a three bedroom, two and a half bath condominium, partial ocean view with a rooftop terrace. It is the perfect short-term rental and can bring in great ROI.

And that one, we just price improved to $565.

[Richard Bexon]
Not bad.

[Jill Reed]
I mean, again, walk to town. It's super easy.

[Richard Bexon]
Wow. It's in Langosta?

[Jill Reed]
No, it's in Tamarindo. It's just around the corner from Mother Earth Vegan. If you know where that location is.

It's in the heart of town really, but quiet just away from the buzz.

[Richard Bexon]
Well, awesome. I always like to speak to people that live in the area because a lot of people, when they looking to relocate to Costa Rica, also potentially want to start a business or some form of service, you know, what do you think is still missing?

[Jill Reed]
You just, you asked me on a funny day. I, I'm a book nerd and I have written a couple of books and I just got done this morning meeting with some folks who started a children's library in Tamarindo and it's, it's so awesome. So I love that.

I think that it's tiny and I would love to see it get bigger. I would love to see a big library in place. I know you say business or service, but I really do think this is something that could improve our communities so much and unite communities, you know, both English speaking, Spanish speaking, also French speaking, German speaking, you know, everybody likes to read.

So that's one thing I think that is going to make a huge impact. And as we grow it out, it'll be even better. The other one is just a personal thing.

I really love a gym that has it all. So I really want to see a fitness facility that has not just a gym, but it has a lap pool and it has access to pickleball and tennis and basketball and also a recovery center for like, like cold therapy and then hot therapy and you know, maybe even space for, for a breath work and that sort of thing. So that's what I'd love to see is a big facility like that.

[Richard Bexon]
Well, I mean, and that could be done in Wackers and Villarreal. I mean, it doesn't need to be in Tamarindo.

[Jill Reed]
Totally, totally accessible to everybody. You drive by it every day.

[Richard Bexon]
Yeah. That's a great idea. That's a really good idea.

[Jill Reed]
I love it. Yeah. And it would provide community again.

You know, we hear a lot, I have kids in school here and, and they're just on the cusp of, of teenager-y times. And so you hear a lot about, we don't have anything for teens. We don't have a place for teens to go.

All we have is a skate park. Voila. Let's, you know, add a teen center to the, to the deluxe fitness center.

[Richard Bexon]
Yeah. I mean, I especially think for teenagers is keeping teenagers somewhat busy, you know, so idle hands don't do the devil's work. Cause my dad used to say, I mean, I've, I've worked most of my teenage years, so I'm glad for that looking back.

Cause I was like, I could imagine the trouble I would've got to if I, so, so yeah, I got to enough trouble anyway, but, but yeah, I know. I completely agree. I completely agree.

But I mean, I think we're going to start to see a lot of this stuff start to develop as again, more families start to relocate to Costa Rica. And I mean, we're just seeing a huge, you know, movement in people just being like, look, I'm, I'm, I'm out. I'm moving to Costa Rica.

[Jill Reed]
Right. I mean, you mentioned investors, and I think we do see a lot of investors right now who are hopping in at a really hot time to hop in they're building out places they're, they're doing developments and that's awesome. But at the same time, we are seeing, we are seeing much more, what looks more like a primary home market.

It is a situation where you have people come down. They're not looking for their vacation home. They're looking for their home and they want to know, you know, how, where can I live?

That's close to everything. I need my grocery store, my school, my kids after school activities. I need to have high speed internet for my job.

I need to be able to get to the airport quickly for work. I want paved roads, et cetera. Those are serious demands in a primary home market, not necessarily a secondary home market.

You can do without a lot of that stuff in a secondary home market, but this, this shift that we're seeing is, is going to definitely improve our area.

[Richard Bexon]
Yeah, I agree. I agree. Well, my last question for you, Jill, was I've kept you long enough, but the last one I'd love to ask, and I know everybody listening likes to hear everyone's response to it.

If you inherited $500,000 and had to invest it into a business or real estate in Costa Rica, what would you invest it in and why?

[Jill Reed]
I would invest it in a short-term rental. I would get as much bang for my buck as I could in one of our primary locations, whether that be Flamingo or Catalinas or Tamarindo, but within walking distance to the, as close to the beach as possible. And if that means going down in the number of rooms versus having more bedrooms, depending on the price, I would take the cut to get closer to the beach because I think it rents a little bit better and brings in better ROI.

Even Playa Grande actually, that's, that's a hot market. You know, that's, we've got some really interesting things going on in Playa Grande, so that would be a good market to check out too, for short term.

[Richard Bexon]
I'm biased to Playa Grande, Jo, anyways. So, but the, I think listening here knows that. So, yeah.

Do you have a particular town that you choose? Tamarindo, Flamingo, or Las Catalinas? I mean, if you had to choose one for rental returns, is there a particular one that you'd just be like, yeah, I'm going to do this?

[Jill Reed]
I think, I think Tamarindo and that's really just a personal preference because it's growing so much. It's, it's really getting lots of cool restaurants and shops and it's just upgrading. And, and, and it's always going to be busy, always going to be, even in the green season, it's still, I was just there this morning, it's packed.

So, I mean, not as packed, obviously in the high tourist season, but it's busy.

[Richard Bexon]
I mean, I was there the other week. I mean, there was traffic in Tamarindo in September and I was like, what's going on?

[Jill Reed]
Well, and also for me, I live in Hacienda Pinilla. So, it just makes it easier for me to be able to deal with a rental that is located a little bit closer to me. If I lived in Potrero, I would probably say Las Catalinas because that's right there.

So, it just depends on, on the location. If I were a little closer to Flamingo, I might say Flamingo, but for me, Tamarindo would be the safest bet.

[Richard Bexon]
Awesome. Well, Jill, I really appreciate you taking the time to come on the podcast. This has been great information for people listening here and I'll place all of your contact details in the description.

But again, thanks very much for your time.

[Jill Reed]
Thank you so much, Richard. I always enjoy being here. It's a pleasure.

[Richard Bexon]
Pleasure's mine. Thank you, Jill.

[Jill Reed]
Thanks a lot.