Costa Rica is characterized by many old timers as the land of the “wanted and the unwanted.” Some who come here are wanted criminals by other nations and others just do not fit in somewhere else, so they come to this country to live.
Want to make a million dollars in Costa Rica? Come with two, and maybe you will leave with one. This advice given to newcomers for over 30 years should now have an inflation adjustment. Bring $5 to $10 million to leave with one.
These statements are no joke. This writer has personally seen it happen over and over again in 33 years. Those who are lucky get to leave. Some just die along the way trying to get their original nest eggs back, fighting the legal battles that ensue.
Even the best-looking real estate or financial deal may have hidden pitfalls.
There are many examples of this from Costa Rica’s not so distant past. Nosara is one, developed by Alan David Hutchison. Potrero-Flamingo was another, and Playa Grande of Guanacaste yet another. The original developers of these projects are long gone. Most are dead.
Nosara, now a Costa Rican tourism jewel, was nothing more than pasture totaling 1,110 hectares (2,718 acres) from 1969 to 1972. One man and a well-known Costa Rica law firm combined three fincas (farms) to create two companies to sell land to foreigners. He placed classified ads in U.S. publications including the Wall Street Journal to find buyers. He knew something then that no one else did in those days.
The lands legally came into being only 10 years earlier in 1961. The Costa Rica government in those days sold for one colon (less than one U.S. dollar) areas of Guanacaste. Including what is now known as Nosara, to the Instituto de Tierras y Colonización (Institute of Lands and Colonization) to be redistributed to those living there for small sums, as a kind of homesteading plan.
The developer bought up those parcels for almost nothing, combining properties into sections and then slivering them off as small subdivided pieces and sold those lots to the many buyers answering his ads. He even offered fantastic payment plans, making the purchase of a lot so attractive it was irresistible.
He promised an incredible development with golf courses, tennis courts, manicured landscaping and the like. Since most of the land was open pastureland for cattle grazing, it was easy to see the vision painted by those selling the project. Many people bought into the dream.
One day, the principal just picked up and left. With the money, of course.
The teenaged sister of this writer was working for the developer as a summer job, so she could be close to the beach in those days. A wonderful time for her, until one day it all ended, for her and all those buyers.
Many of them bought the property for future investment, so they did not live in Costa Rica. When they came back, they found a nightmare. The jungle had reclaimed the region. Few could even make out what lot was theirs.
Now 30 some years later, the Nosara Civic Association and the Surfside property owners’ association of Potrero are still trying to organize controlled development. Many other organizations do the same throughout Costa Rica in similar development projects gone bust.
What is the point to this story?
The point is today, there are even bigger super projects being marketed for a piece of Costa Rica. However, today, developers have Websites, multicolored brochures with enhanced pictures in design programs like Photoshop to entice buyers. They also have FedEx and DHL to pickup deposits anywhere in the world, so one does not even need to see a property to snag it. Some of these projects are selling out fast, with the owner’s collecting literally millions and millions of dollars.
What was true 30 years ago is true today. A project has a development plan, or it does not. Fancy promotion to sell land in Costa Rican can be someone’s way to make a lot of money. How can one know for sure?
Well, it is hard to know for sure about any project.
Using common sense helps, but only when combined with true due diligence. This term means doing a careful investigation of the information in any offer including, but not limited to, having access to financial and accounting information, feasibility and environmental studies to discover the risks and value to any transaction. If a development cannot supply you with all information you request, back off.
There are many good investments in Costa Rica. Finding them is the trick.
Article first published in A.M. Costa Rica on January 10, 2005.
