Investment and risk

Buying a finished property means you’ll be sinking a sizable chunk of money into a relatively illiquid asset in a developing country. This means a couple of things. First, that you can look on this outlay of resources as an investment. In the long-run, you will probably sell the property for more than you bought it. Second, it means you will be taking on a decent amount of risk. Things can change quickly in small developing countries, for the worse as well as for the better. The significance of the risk changes in relation to your plans for the property. If you are retired or are working in Costa Rica and plan to use the finished house or condo as your primary residence, the risk is low. Property bought as vacation homes or investments come with a higher risk, unless you can afford to have $100,000 to $300,000 of your assets tied down for a significant amount of time with no return. Also, lowering the risk to your investment will require a decent amount of due diligence. That means the involvement of lawyers, civil engineers, and other professionals you might have to hire to check out the property and title, depending on the size of your investment. The “head-ache factor” is significantly higher than if you were to rent, though lower compared to building your own house.

So to re-cap the pros and cons of buying versus renting or building: