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Vacation Rental Property as Investment in Costa Rica

Stacey Watson

Are you thinking of investing in property in Costa Rica and using it as a vacation rental?

That is a great idea and one that many people have profited from over the years. This idea allows you to buy a property at it’s best price and then use it to bring in revenue for yourselves. It might be that you are in the beginning of a 5 year plan to retirement and want to lock in the property of your dreams or have come into some money that you would like to put to work. Buying a Vacation Rental Property in Costa Rica is a very good option.

What can you expect as a return on your investment?

On average you should expect a net return of 4%-6% (ROI) on your investment. You will get better return if you purchase a property that is within walking distance to the beach, say 1-3 blocks from the ocean, and/or has ocean views. These properties will rent, on average, 65% of the year in Tamarindo. You will also get better return if you rent the property during the peak weeks and during high season. Save your visits for off season.

What are the best months to rent out your vacation rental and what are the best months to use your vacation rental?

The “peak times” are the weeks of Christmas, New Years, Samana Santa (the week leading up to Easter) and special events weekends like the Marathon. These are the best times to rent out your Vacation Rental. In those times one could expect at least double the normal rental income. The high season for rentals is December through April. This is when it gets cold in other places and folks are traveling to warm weather destinations. The mid season is June through August and the rainy season months are May, September and October. These mid and low season months are great to visit because the weather is nice, hot but tempered with a cooling rain. There are less tourists on the beaches and in the restaurants and you get to connect with the local community more.

Are there rental companies that can help market your property?

Yes, there are fantastic rental companies that can market, rent and manage your clients. Depending on the project you purchase, your Costa Rica RE/MAX agent can suggest the rental company that will perform best for that particular project. The rental company will promote your property locally and internationally. They will field emails and answer questions for your potential renters. They will manage and take care of your clients while they are renting. They also handle all of the billing and records.

How can you optimize the marketing of your property?

You can help your vacation rental management company by supplementing their marketing with your own involvement taking advantage of your unique spheres of influence. One idea is to set up your own VRBO and AIRBNB web sites and funnel those leads to your rental company to manage. Another way to rank better on those web sites would be it invite friends and family to stay at your rental property and ask that they write a positive review on sites such as Trip Advisor. You should have professional photos taken to best present your property on the web. If you can stage the property, even better. There are many great photographers here locally that can provide this service.

What do the rental companies charge for their services?

Most rental companies charge a commission of 20% of the business that they generate for you. For this amount they procure and manage your clients while they are using your unit. That includes key service, help if something breaks and often cleanings. If, in the case that you supply the rental lead, they charge only 10% to handle the managing of the client while they are in the unit.

What is the best type of property to purchase for Vacation Rental?

The best type of property to purchase for your vacation rental is probably the type of property that you would like to stay at while on vacation. The property should be near to the beach and have ocean view if possible. That helps in the rentals if you can check those boxes on your web sites. It should have security or be gated to offer your renters peace of mind. Also, the furniture should be clean, comfortable and the unit should be outfitted with the necessary sundries a vacationer would need. This all will help your ranking on travel sites should renters write reviews.