Invest Wisely: Rent a Second Property in Costa Rica

Many investors have chosen to acquire various properties as a way to generate passive income in Costa Rica. Investing in a second vacation property and renting it out during the months you are out of the country or unable to use it is the best way to break into the real estate market.

Explore with us this investment alternative and learn how property management works in Costa Rica.

What Property Management?

Property management is the administration of rental properties. A property manager ensure that the property is operating optimally and profitably for the owner.

Some of the tasks include:

Rental management: The property manager is responsible for the search for tenants, the selection and evaluation of their applications. In addition, it is also responsible for collecting fees and monitoring payment terms.
Maintenance and repairs: Ensure that the property is kept in good condition and coordinate necessary repairs. This includes everything from hiring maintenance and cleaning services to managing emergency repairs or general problems.
Communication with tenants and landlords: It is the point of contact between tenants and the landlord, and is responsible for keeping both parties informed about the status of the property and any other matters related to the rental.
Financial management: Including accounting and handling finances. This involves creating financial reports, managing expenses and maximizing property revenue.

View this post on Instagram

A post shared by Nativu Santa Teresa (@nativusantateresa)

Property Management in Costa Rica

The property manager can be the owner himself, however, for cases where it is a service offered by a third party, these are the most common conditions:

Monthly payment + 20% + tax

It is charged as a property management fee that includes things like bookkeeping, making payments, maintenance, among others; plus an additional percentage of 20% plus taxes.

In addition to this, a charge for ‘extra maintenance’ costs (if necessary) plus a percentage of 10-15%.

Fee of 35% of the rental cost

This model charges only 35% to the rental price without any additional cost, however, it is not so recommended since sometimes it can be more expensive because that rate goes up according to the rental price, which may vary according to external factors. Plus it does not have additional costs and therefore will not always be able to give the best maintenance to the property.

View this post on Instagram

A post shared by Nativu Grecia (@nativugrecia)

How to take advantage of Airbnb and hosting apps to enter the real estate market?

Investing in property management for Airbnb and similar apps can be an interesting investment strategy for those looking to earn passive income through short-term rentals. This platform has had a great growth in recent years and in Costa Rica is increasingly used by both nationals and foreigners and tourists.

Some of the advantages offered by this model is that it allows you to have control of who rents the property and know that there is security throughout the process. You can know the rating in addition to having space for feedback. The platform has a backup towards the property in case there is any damage which allows to cover future expenses without the need to invest extra.

On the other hand the disadvantages may be that the application increases the value of the fee for use and maintenance and this does not belong to the owner, in addition you can not keep an accounting record of expenses.

There are several ways to invest and enter the real estate market. Short-term rentals are an excellent option for those who have property in Costa Rica but spend several months of the year living abroad. Depending on where the property is located the flow of tenants can be stable and by keeping the house occupied, maintenance is more cost-effective.

Lorena Clare, Nativu Guanacaste Advisor

Recommendations for investors

Tax Payment: with the rental rate you can take advantage of the payment of monthly and annual taxes of the property; changing from a spending model to a cost one.
Diversify your portfolio: Investing in properties at different strategic points can generate passive income throughout the year. Don’t be afraid to take advantage of the different areas Costa Rica has to offer.
Build a team: Invest in trusted people who perform maintenance and cleaning services before, during, and after a rental. In addition to ensuring that your property is in good hands, it contributes to local job creation and community development.
Bookkeeping: Keep payments up to date for utilities at the property. A property manager can be of great help throughout the process.
Contracts and customer service: Have all the rules previously established to avoid misunderstandings. Having someone available to listen to feedback is key to standing out in the market.
Get advice from a specialist: Knowing the market and trends can be complicated if you are not 100% in one place. With the help of a Nativu real estate advisor, you can stay up-to-date with the most important information to be able to invest wisely.