Investing & Earning Rental Income In Costa Rica

We’re chatting with Sue as she shows us round her enviable home. Big picture windows in the open-plan living space frame some amazing views of forest-covered hills. The kitchen’s got hardwood cabinetry and wide granite counters, there’s beautiful tile in the bathrooms and the high ceilings make it feel really nice and airy.

But my gaze keeps going back to the big outdoor space. It’s a shame, Sue comments, we just missed the monkeys. She loves sitting on her terrace, in the shade of a huge mango tree. All kinds of monkeys and coatis and toucans and parrots come to eat the fruit on the tree when it’s ripe. So Sue gets to enjoy a mini-safari as she eats breakfast or lunch.

I’m in the Pacific Lots community in Costa Rica’s Southern Zone. I can’t help but compare Sue’s home to the little hotel I’m staying in. The cramped rooms, faded décor and tired breakfast room in my hotel desperately need a makeover. The manager badly needs some lessons from charm school. It’s over-priced. But the hotel likely won’t bother changing any of that. Why would they? They’re fully booked, same as every other hotel in the area.

That’s because the biggest hotel in the Southern Zone boasts all of 30 rooms. My favorite is a small family-run hotel in a stunning forested setting. It’s full. As is my second choice, my third choice and even my fourth. The hotel I’m in now didn’t make it to any kind of shortlist. But it’s the only one that’s got rooms available.

It’s a common problem throughout the year in the Southern Zone. In July and August, European tourists visit for their summer vacation. In winter, North Americans want to stay here, to escape the cold weather back home. Christmas, New Year and Easter are peak season when everyone wants to visit. But they’re often scrabbling to find somewhere to stay.

Earning Rental Income In Costa Rica

If you’re looking for a location in Costa Rica where you can earn a strong rental income, then look to the Southern Zone. Renting out your home in this part of Costa Rica could earn nice rental income.

A search on the website offering rentals in Pacific Lots shows only 10 homes out of the 250 homes in the community available for rent.

It’s not surprising that so few owners rent their homes in Pacific Lots. You understand why when you see the houses in person. They’re all unique, custom-designed and very personal to the owners. I toured one with an incredible home office, a gourmet kitchen and a beautiful pool and grill area with an awesome ocean view.

The owners I met were a mix of Americans and Canadians. Most spent a big chunk of their year in Pacific Lots. They wanted a low-key location, away from big city bustle, where they could kick back by the pool, enjoy the warm sunshine and feel close to nature. They didn’t need rental income from their Costa Rican homes. They preferred to keep their homes private, for them and their friends and family to enjoy.

How one Owner Makes Strong Rental Income From his Home in Costa Rica

That spells opportunity for those owners that do rent their homes. As well as short-term tourist demand, there’s longer-term demand. Owners in Pacific Lots often want to live on-site while their home is under construction.

On the website listing rentals in Pacific Lots, rental rates range from $500 a week for a 1-bed house up to $1500 a week for a four-bed home. Here are our Top Eight Tips for Maximizing your Property’s Rental Potential:

Some owners manage the rental of their home themselves. One owner advertises heavily online. He puts up tear sheets in his home city. He drops cards into local businesses and restaurants. He does everything he can to find renters.

Then he makes sure everything’s perfect when they arrive. He provides lots of little extras – beer and wine in the fridge, fishing gear and surfboards renters can use during their stay. It clearly works. Around half his renters are repeat customers or referrals.

He charges up to $2500 a week for his three-bed house. He rents it year-round with a couple of weeks set aside for maintenance. He made $88,000 in rental income in just one year from his house in Pacific Lots.

It’s even more impressive when you look at his carry costs. His annual property tax bill is $500. He pays around $350 a year in community fees. He pays $500 a month for insurance, utilities, cleaning, gardening and pool maintenance. That’s less than $7,000 – and, remember, he grossed $88,000 in just one year.

More tourists are coming to the Southern Zone since a new coastal highway opened in 2010. This boutique destination struggles to meet current demand for accommodation. First-time visitors usually stay in a hotel. But when they come back, they often want to rent a home.

Plus, many visitors prefer the space and amenities they get with a private rental. It works out cheaper to rent a whole house, too, if you’re traveling as a family or group of friends.

If you’re looking for a dreamy location, and a place with strong rental income potential, Costa Rica’s Southern Zone fits the bill. Pacific Lots’ turnkey service can build your dream home. If you choose to rent it out when you’re not enjoying it yourself, you can earn strong rental income.