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Why is Costa Rica better than Nicaragua for a real estate investment?

Posted by Katie on September 20, 2017
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Location is key, so whether you’re planning your first or hundredth real estate purchase, deciding on the correct investment location is of utmost importance. In Central America, the countries are small with a lot in common, and analyzing each country to find the right fit for your investment is often a difficult task. Costa Rica and Nicaragua are common destinations for real estate investors, and while both countries have beautiful natural views and many diverse cities to offer, the differences are just as important. Costa Rica and Nicaragua differ greatly on political atmosphere, economic climate, modern development, and many other issues that just may help you make your decision.

Local Politics

First off, Costa Rica is Latin America’s oldest and most stable democracy. Most widely known for not having an army or any taxation for military expenditures, Costa Rica prides itself on a history of stable politics and unwavering democracy since 1869. The political climate of a region is an extremely important factor in any investment regardless of whether you plan on living in the country. The stable political climate in Costa Rica will help ensure the security of your investments and any profits. Nicaragua has not had the good fortune of experiencing a similar stability. While Nicaragua remains an independent democracy, some political unease may make matters more difficult for potential buyers needing an assurance of safety for their purchase.

A huge benefit of investing in Costa Rican real estate is that foreign ownership is totally legal and easy due to the instatement of CAFTA (US-Costa Rica Free Trade Agreement). While the residency process can be lengthy and tedious, there are laws in place to ease along the real estate purchasing process. After purchasing, you can apply for residency as an investor, a more secure route. Costa Rica’s friendly stance goes a long way in making potential buyers feel safe about their investments. This pro-US attitude shows itself in financial stability and taxation laws as well. Property tax rates are astonishingly low and capital gains remain untaxed, making an already cost-efficient location even better for the investor on a budget.

Economy

Costa Rica also has a stable and growing economy. Since the year 2000, the country has experienced a stable growth of the GDP as well as a significant reduction of poverty (Costa Rica poverty levels are currently around 24%, compared to Nicaragua’s 43%). The country maintains business friendly policies and offers significant opportunity for entrepreneurship. Not only is there a rapidly growing tourism industry, the agricultural industry is strong and growing. Exports between Costa Rica and the US are easy due to the strong business ties between the two countries, offering yet another perk for those hoping to start a business with their real estate purchase. Costa Rica is quickly becoming known as one of the best emerging real estate markets in the world. Over the last ten years, investors in Costa Rica have managed to double or even triple their investment values by deciding on the correct location for their buys. This trend seems to be continuing as the economy strengthens further. Just across the northern border, Nicaragua remains the second poorest country in Central America after Haiti and although it does provide multiple investment opportunities, the weak economy is a concern for any buyer.

City Development

A significant draw to Costa Rica for potential investors is the country’s advanced development. This holds true for those investing in a family home or in a business opportunity. With two major international airports, ever improving highways, reliable mailing systems, and Western business practices, a North American buyer may find transitioning to Costa Rica significantly easier than expected. Airline tickets to the US from Costa Rica are often no more expensive than a simple domestic flight, and common business practices between the US and Costa Rica may ease a new entrepreneur’s mind. Modern development may be the single biggest difference a first-time visitor notices when traveling through Nicaragua and Costa Rica. While Nicaragua is taking steps to advance the development of their cities, they are yet to maintain the streets and public areas as Costa Rica has done.

Relaxed Culture

For investors planning on living in the country where they purchase their real estate, Costa Rica offers some incredible benefits unequaled by other countries. There is a good reason why Costa Rica remains the #1 country choice for Americans living abroad! Costa Rica supports a laid back, family friendly lifestyle with all the modern conveniences of a developed nation. You’ll find many English-speaking professionals and locals are often friendly and patient when dealing with language difficulties. Living in a more diverse country with access to cultures familiar to you has a significant effect on the transitioning process of relocating families.

While both Costa Rica and Nicaragua offer breathtaking views and endless adventure opportunities, those looking to make a long-term move may be interested in the political and economic climate of both countries before choosing a location. The decision of where to move or start a business is deeply personal and depends on many private factors, but assuring the security of your purchase and comfort of your family is a good place to start.