Investment paradise in the Caribbean

Many readers who follow my publications already know that, since the beginning of this year, we have been specializing not only in real estate investment opportunities in Toronto and Calgary, but also in Caribbean real estate. On our YouTube channel (@newgtacondos), in the Caribbean playlist, you can already watch a series of videos about Caribbean properties that may be of interest both to buyers looking for a vacation home and to investors.

Over the past few years, real estate in the Caribbean has not only been rising rapidly in value, but has also been generating very strong income from short-term rentals. Our company provides a full range of services for the purchase and management of this type of property. The most common model is to buy a property for personal use for two or three months a year, while renting it out short term during the rest of the year, allowing the owner to generate excellent monthly income.

Previously, I wrote about real estate in the Dominican Republic. Today, I would like to talk about real estate in Costa Rica and, in particular, about a project that, in my opinion, may interest many people because it offers not only the opportunity to purchase an excellent property for personal vacations, but also the potential to earn very attractive income. The condominium is called Naumi Seaside and is part of the large Pacifico community, one of the most prestigious developments in the heart of Costa Rica’s fashionable Pacific Coast region, on Coco Bay, surrounded by some of the world’s leading branded hotels, including Four Seasons, Ritz-Carlton, and Waldorf Resorts. In addition, a large parcel of land next to the Pacifico community was recently purchased for the construction of a OneandOnly hotel, a brand that is currently considered one of the global leaders among ultra-luxury hotel groups. Around the area, there are magnificent beaches, numerous restaurants, boutiques, shops, a golf course, yacht clubs — in short, everything needed for an exceptionally comfortable stay in a tropical paradise where both the air and water temperatures remain around 30 degrees Celsius year-round. At the same time, world-famous national parks with truly untouched nature, mountain rivers, and an abundance of exotic wildlife are only 10 to 15 minutes away by car. The Papagayo Peninsula is the most famous tourist destination in all of Costa Rica, where the tourist season continues throughout the year. For example, in the Pacifico community, the vacancy rate is under 20%, while rental rates start at $250 per night for studio-type apartments.

In addition to multiple swimming pools, an impressive sports complex with tennis courts, and several of its own restaurants, the community also features a Beach Club with an excellent beach and several pools directly on the shoreline of Coco Bay. But that is not all. Nimbo Boat Club, owned by Pacifico, includes more than a dozen different yachts, ranging from small fishing boats to multimillion-dollar yachts that can easily accommodate a crew and 10 to 15 guests. All of this is available for the exclusive use of Pacifico property owners.

Pacifico is a vast community located on the hills along the Coco Bay coastline. Development began approximately 15 years ago, and today about half of the site has been built out. Ahead are several more condominium complexes and approximately 300 villas.

Naumi Seaside is part of the next phase of construction. It will consist of five six-storey buildings located on a high hill. Most of the apartments will have direct ocean views. Prices for one-bedroom apartments measuring 700 square feet start from US$215,000. The most expensive spacious three-bedroom apartments with magnificent views are priced at around US$530,000.

Sales in the first building began three weeks ago, and approximately 70% of the apartments have already been sold. Today, however, we are also beginning to accept applications for the second and third buildings of the project, which will be released for sale very soon. A limited number of villas are also available, with prices starting from US$850,000. To purchase an apartment during construction, 50% of the purchase price is paid in five installments. Importantly, in Costa Rica, just as in Canada, deposit funds are held in a lawyer’s trust account and are not used for construction. For the remaining 50%, financing can be obtained from a local bank. This mortgage will not appear on your Canadian credit history and will not complicate future financing in Canada. Obtaining a mortgage for 50% of the property value is a fairly straightforward process. Mortgage rates in Costa Rica are comparable to lending rates in Canada.

Next, I would like to show an example of the profit investors may expect. These calculations are very conservative. We used an annual property appreciation rate of 5%, although in reality, prices in Costa Rica have been rising by more than 10% per year in recent years. So, let us take a one-bedroom apartment measuring 729 square feet, or 68 square metres, with an ocean view. The price of such an apartment is US$256,000, or approximately CAD$330,000. To purchase it, including closing costs, you would need to contribute US$141,000 in five installments during construction, which is scheduled to be completed in early 2025. The mortgage would be US$128,000, with a monthly mortgage payment of US$768. Rental income from this apartment would be almost US$5,000 per month. Operating expenses, if the apartment is included in the rental pool, would amount to US$1,160 per month. As a result, already in the first year after construction is completed, the property owner receives almost US$25,000 in net income after all expenses. In other words, you recover your invested capital in six years.

We calculated the investment cycle at approximately eight years: one and a half years of construction and seven years of rental operation. Taking into account annual property appreciation of 5%, which is significantly below the real market growth rate, annual inflation of 3%, and a 40% vacancy rate instead of the actual 20%, since our calculation assumes that you will use the apartment personally for two and a half months each year, the result is as follows: over the calculated investment cycle, you receive more than US$200,000 in net cash flow, and by the seventh year the property value will be approximately US$360,000, while the mortgage balance will be just over US$100,000. In the end, over seven years of rental operation, the accumulated equity plus cash flow — the money received by the owner during that period — will amount to approximately US$450,000 on an initial investment of US$140,000. This represents a return of more than 45% per year on invested capital over an eight-year period. And this is based on very conservative calculations.

In addition, by becoming a member of Nimbo Boat Club — with the membership fee reduced to only US$5,000 when purchasing a property through us — you may receive an additional US$5,000 to US$7,000 per year from boat rentals, potentially bringing the investment return to 50% annually. More information about the project is available on our portal www.buycaribbeanhome.com. There you will also find all financial calculations for this project. If this is your first time using our portal, you will first need to register and create your password. Full information is available only to registered users. Those who already work with us in Toronto and Calgary and have a login and password for www.newGTAcondo.com do not need to register again: both portals use a shared client database, and your existing login and password will work.

You can purchase property in the Pacifico project either remotely or by taking an introductory tour. If you purchase, our company will reimburse you US$2,000 for the trip, and our local representatives will organize an excellent introduction to the project and the surrounding area.

And finally, one more important point: all buyers of real estate in Costa Rica valued at more than US$200,000 are almost automatically eligible to obtain residence permits for all family members. One of the most important features of this program is that the applicant is not required to live in the country. Accordingly, it is ideally suited for investors. Temporary residency gives you access to medical services, which in Costa Rica are covered by an insurance policy, and the level of medicine in Costa Rica is quite good. You may also open your own business or work as a self-employed person. The only difference between temporary and permanent residency is that with temporary residency you do not have the right to work for someone else. After three years of temporary residency, you receive permanent residency, and from that moment you have the right to work for any organization in the country. To obtain Costa Rican citizenship, you must spend a total of seven years in temporary and permanent residency status. As a rule, this means three years of temporary residency and four years of permanent residency. In other words, the entire process of obtaining citizenship takes about seven years. Moreover, unlike many countries where obtaining a residence permit is a fairly expensive procedure, in Costa Rica residency will cost only US$2,000 for the main applicant and US$500 for each additional family member. The Costa Rican passport is well regarded internationally and allows visa-free entry to 139 countries around the world, including the European Union and Canada. If you purchase real estate through our company, the Costa Rican legal firm working with us and handling immigration matters will help you obtain residency quickly and properly.

For many residents of the United States and Canada, especially those whose business is connected with online income or passive income generated outside the United States and Canada, Costa Rican residency may provide an opportunity to significantly reduce taxes on earned income. During my visits to Costa Rica, I met quite a few Canadians who now live in Costa Rica either permanently or part of the year, and they chose this country not only because they wanted to live in a tropical paradise, but also because of its low taxes.