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Owning a Vacation Rental Property as an Investment in Costa Rica

Over the years, many people have profited from owning a vacation rental in the Costa Ballena region of Costa Rica. Those who buy vacation rentals in Costa Ballena tend to use it as a second home for themselves.  They view it as an investment for their future; something to retire to one day. In the meantime, to offset some of the costs of ownership, they rent it out while they continue to live and work in their country of origin.  

If you are beginning your own 5 year plan to retirement, or if you are looking to invest your money into something that you can also enjoy, consider locking in the property of your dreams now.  Put your savings to work while you enjoy the fruits of your labor once or twice a year, all in the comfort and convenience of your very own home away from home.

Below are some common questions that investors have when it comes to the Costa Rica rentals market, and the answers that will help you make the decision on whether investing in a rental home is right for you.

What can I expect as a return on my real estate investment in Costa Rica?

As a rule of thumb for Costa Rica vacation rental properties, you can expect an annual net return of 4%-6% on your investment.  On average, a good rental property will rent for about 65% of the year.  

Depending on the features of the property, the average rental home in the Costa Ballena can expect occupancy rates of:

  • 75%-100% occupancy rate December – April, 
  • 25 – 50% May – July
  • 10 – 25% August – September, and November
  • 0-10% October

What should I look for when purchasing a potential rental property?

Purchasing a property within walking distance to the beach or with great ocean views will typically get you a better return.  This is not always the case in South Pacific Costa Rica, where the peace and tranquility of a beautiful jungle property that is close to a river with a waterfall can also be a big draw card for the animal lovers, who are abundantly attracted to this region.

Other ideal qualities in a vacation rental include:

  • Close proximity to the beach
  • Close proximity to the highway
  • Security and or gate
  • Clean and comfortable
  • Affordable

What are the best months to rent out my vacation home and what are the best months to use my vacation rental?

Peak times for the Costa Ballena region of Costa Rica are as follows:

  • Christmas
  • New Years
  • Semana Santa (Easter week – generally from Thursday to Sunday)
  • Envision Festival (last weekend of February)
  • Whale’s and Dolphin’s Festival (the first and second weekends of September)

*Peak times can expect double the normal rental income. Don’t plan your stay at your rental during these periods and don’t forget to increase your rental prices to your premium rates for these times of year.

High season is from December to April.  This is the dry season here; the hottest time of year in South Pacific Costa Rica, and the coldest time of year in the majority of the Northern Hemisphere.  This is traditionally the time of year that Americans and Europeans prefer to travel to warm weather destinations.

From May to November is the rainy season, where the weather is still warm and nice, but the heat is tempered by a refreshing rain that typically comes in the afternoons/evenings.  This time of year is generally less popular with tourists, although it holds its own appeals for those who prefer milder temperatures, lots of fresh fruit in season, and plenty more wildlife sightings.

Are there rental companies that can help me market my property?

There are many local companies that can market, rent and manage your property and clients.  They promote locally and internationally and manage questions and concerns, taking care of clients before and while they are renting.  They handle billing and taking records for you, and generally take a 20% commission for all of the above work.  We recommend Jaguar Property Management for your rental needs in the Costa Ballena region.

How can I, the owner, optimize the marketing of my property?

Often, rental property owners will set up their own VRBO and AirBNB accounts to funnel leads to their property managers.  Getting positive reviews on Trip Advisor is helpful to receiving more bookings. Have professional photos and stage the property to look its most hospitable.

To be a great rental home, it is advised to have the following:

  • At least 3 bedrooms
  • En suite bathrooms
  • Ocean view
  • Pool
  • A/C (at least in the bedrooms)
  • Internet
  • Cell service capability
  • TV/Satellite
  • Privacy
  • Wildlife and birdlife
  • Good privacy

Additional features that add to the success of a rental property are:

  • Microwave
  • TV with DVD player and movie DVDs
  • BBQ propane outdoor grill
  • Beach chairs
  • Guest information book with preferred tour companies, local eateries, etc
  • Pool/lounge chairs
  • Blow dryer for each bathroom
  • Blender for smoothies/drinks
  • Board games or playing cards
  • Books
  • Candles, flashlights
  • Flower vases, preferably the tall square variety made of thick glass
  • A large selection of good quality bath and beach towels
  • 2+ sheet sets and a comforter/shams for each bed
  • 2 sets of zippered covers for all pillows
  • 2 mattress covers for each bed

What makes the Costa Ballena region a popular vacation destination?

Although this is not the most popular region of Costa Rica for numbers of visitors, there are a number of remarkable and unique qualities about this region that keep tourists coming back every year.  These include:

  • Natural attractions like beaches, mountains, and waterfalls
  • Privacy and quiet solitude
  • The wildlife corridor for which this region is famous
  • Frequent animal sightings (sloths, monkeys, toucans, macaws, iguanas, etc)
  • Adventure tourism, and many reputable companies that provide rentals and guides (mangrove tours, surfing, SUP, kayaking, zip lining, parasailing, paragliding, etc)
  • Great community (dining, entertainment, and meet up groups to enjoy both)
  • Proximity to all of the above

What will my rental competition look like?

There are no big hotel chains in the Costa Ballena area, and the biggest hotel has less than 30 rooms.  Most of the local accommodations are bed and breakfast or home stays.

What are the typical vacation rental property ownership costs?

In Costa Rica, the only taxes that you have to pay for your AirBnB or VRBO vacation property are the national property taxes (0.25% of property value annually)

Other operational expenses include:

  • Property insurance
  • HOA fees (if applicable to your development)
  • Utilities (water, electric, gas, cable)
  • Property insurance (weather damage, vandalism)
  • Pool maintenance
  • Cleaning services
  • Repairs and maintenance
  • Exterior landscaping

Should I buy a vacation rental in the Costa Ballena?

There are always downsides to anything – if you are looking for them!  Things like covering property taxes, or paying for maintenance and utilities are technically minuses on a ledger, however the pluses can more than cover these and bring you back in the black.

So to recap, the pros of buying vacation rental property in the Costa Ballena include:

  • A vacation property can provide another source of supplemental income to offset homeownership and vacation expenses
  • You can take advantage of tax deductions
  • Properties that are successful vacation rentals are valued by the real estate market in case you want to sell your investment in the future
  • You can enjoy your vacation rental property when you want