As COVID-19 continues to spread, investors struggle to protect their assets and investments. The health crisis has caused enormous uncertainty and volatility, which is confirmed by the drop in production and economic activities. Therefore, investing in Real Estate in Costa Rica in times of COVID-19 can be a good option, where crises can help to buy with advantages.

There is no doubt that the markets in Costa Rica are being affected strongly and a recession is no longer just speculation, it seems to be a reality.

How do Real Estate investments behave during this crisis?

Investing in real estate is a mechanism that has been used to generate wealth for centuries and that has sometimes been considered foolproof. But the reality is that no investment, including real estate, is fully resistant to a crisis like the current one.

Real estate investments can certainly outperform many other investments, but not all categories of real estate assets will be able to weather shrinking markets.

Before proceeding with the acquisition of real estate and in order to avoid a bad investment or counterproductive legal situation, it is vitally important to study the following, among other things:

a) Location of the property
b) Situation of the real estate market in the region where the property is located
c) Aptitude (Commercial / Residential / Mixed, etc.)
d) Real value
e) Due Diligence Study

Income, such as a residential rental, does not necessarily make it ideal right now. We face the highest unemployment figures in our history, so people don’t have as much liquidity right now to spend on new rents. This is an example of multiple situations that we must weigh before proceeding with the acquisition.

Likewise, if you have commercial premises that depend on sales in stores and the measures imposed or proposed by the Ministry of Health, you are forcing consumers to stay at home; your tenants will suffer, and it won’t be long before they can’t pay their rents.
If it is vitally important to clarify that the monthly income produced by the property may decrease, but not its value over time, which makes it safe investments over time.

How to invest to survive a crisis like the current one?

Diversification is important when making real estate investments, it can help reduce risk exposure.

Likewise, it helps to try to have a well-balanced portfolio with low leverage ratios. Having less debt will increase your chances of being able to cope in times of crisis like the present one.

What cannot be forgotten is that crises are opportunities to buy in better conditions, well thought out real estate investments, with good advice, will usually yield the desired results.

There is a significant amount of very productive real estate investments in Costa Rica, so with the proper financial and legal advice, you can ensure an investment from which you can enjoy significant returns, and whose value will be maintained over time.

At ERP Abogados we will always recommend that you carry out the process in order to guarantee the investment, or at least assume the risks in an informed way, to investing in Real Estate in Costa Rica. Under no circumstances is it advisable to proceed with the business without such due diligence.

Without a doubt, the purchase of the real estate, whatever the reason, represents one of the most important decisions that any person makes, from a financial, personal, and family point of view, so we reiterate that it is essential to carry out the so-called Due Diligence Process or “Due Diligence”.

This is, in general terms, the investigation process on the property, in order to discover possible hidden risks that could harm the interests of the buyer.

At ERP Lawyers & Associates we have a team specialized in real estate law and real estate transactions in general. Contact us at info@erplawyers.com and receive personalized legal advice.