Are you thinking of growing your Airbnb portfolio? Why not Costa Rica? The beautiful island with its unspoiled beaches, its famous surf towns to its diverse wildlife and nature. Not to mention, Costa Rica is one of the top destinations among travelers and is proven to be a popular investment option among property managers and investors looking to invest in the Airbnb market.
But of course! There are always pros and cons to investing in a vacation rental property in Costa Rica. Therefore, it is important to not act impulsively and to do research before starting an Airbnb business. Find out what are the short-term laws in Costa Rica. What are the ideal locations that give a potential return of income? These are just some of the questions to consider before investing in an Airbnb market in Costa Rica. More importantly, think about investing in property management software like Hostaway to manage and grow your vacation rental business. Honestly, there is no right or wrong answer when it comes to investing in a property.
Without further ado, let's look at:
Tourists gravitated toward Costa Rica's natural beauty and biodiversity from its lakes, beaches, volcanoes, rivers, waterfalls, natural landscapes, mild-year-round temperatures, low cost of living, and more. More importantly, Costa Rica is known to be a refuge for adventure seekers, retirees, and vacationers.
According to International Press, CNN states
"Costa Rica is a magnet for international tourists, and the Central American state's astonishing geographical and home to over 5% of the world's biological diversity---packed into an area just slightly bigger than Switzerland".
Moreover, Costa Rica has welcomed over 3.1 million tourists in 2019 prior to COVID and in 2020, 1.5 million tourists. According to Costa Rica's Tourism Institute, ICT, this figure will increase at the start of the peak season which began in the last week of November 2021 and will conclude at the beginning of March 2022.
Apart from that, there are no restrictions on owning an Airbnb rental in Costa Rica where many have enjoyed using this platform to earn a passive income. Additionally, in Costa Rica, they do not pay taxes which has become an advantage to property owners. However, it was reported by the Costa Rica Guide, that an Airbnb representative agreed the company would be willing to “adjust its platform to facilitate tax collection from Airbnb hosts of short-term rentals of less than thirty days.”
Considering, that Costa Rica has a lot to offer, Airbnb in Costa Rica is considered a good investment strategy with a strong return on investment. Costa Rica's property taxes are reasonable and sell a fraction similar to the States whether its goal is to live permanently or for holiday. Based on studies shown, an expectation of net return on average is between 4% to 6% on your investment after deduction of all expenses. The rental demand is high during peak season with an average occupancy rate of 50% especially if Airbnb properties are close to amenities and within walking distance of the beach. That being said, Costa Rica is a great option for buying an Airbnb property, as long as you go about it the right way.
The golden mantra to investing in a real estate property is a location that determines your return on investment. That being said, it is vital to first analyze whether the location of the property is popular- a hotspot for tourists, accessible, desirable, and the seasonality.
In consideration, locations that are in proximity to beaches, mountains, or tourist hotspots are ideally the top markets for Airbnb investments, especially locations that are present all year round among tourists leading to maximizing occupancy rates and high rental demand.
Before buying or investing in a property, find out if the location of the property is accessible to basic amenities such as fast WiFi, Satellite Tv, and more. Note that, properties located in rural areas in Costa Rica may not have access to basic amenities which leads to a bad Airbnb investment.
Apart from that, also ensure that the location of the property is in proximity to the beach, surf spots, local hotspots, restaurants, public transport, and so forth. Keep in mind, that some locations may not be accessible to four-wheel drive during the rainy season as it may appear differently in the dry season. And some roads may appear closer to the map but in reality, seem a long hard passage drive.
That being said, it is important to ensure that the Airbnb property you are investing in should be accessible leaving less risk to your Airbnb investment and increasing profits for your future business venture.
Like any other country, travelers and property managers need to exercise security measures, especially dealing with properties located in tourist areas. Properties left unattended and improperly maintained have a way of attracting petty theft which affects guests that leads to negative experiences resulting in negative reviews.
That being said, ensure to maintain a well-secured property by considering investing in smart locks which can be a benefit to both property managers and guests. If not, consider hiring staff to keep an eye on as well as maintenance of the Airbnb property.
While Costa Rica has not enforced strict rules on owning a vacation rental, it is still important to be aware of the local laws and regulations of the city. Keep in mind, that certain locations may prohibit short-term rentals and may require a license before starting an Airbnb business. That being said, it is highly recommended for property managers or investors to avoid legal issues or financial penalties that may affect your vacation rental in, the long run.
More importantly, research for properties that are primarily located in cities that are Airbnb-friendly and will not likely affect your return on investment.
Ask yourself, can you rent your vacation rental at a competitive price and still make a profit? More importantly, before committing to investing in an Airbnb property, can you forecast the future outcome and Airbnb performance?
That being said, use real estate investment tools like AirDNA or Mashvisor to determine reliable data to find out whether it is worth the investment. Moreover, with the help of Airbnb analytics, you can find out the performance of the property based on occupancy rates, cash flow, cash on cash return, cap rate, and comparable rental income.
Did you know where Playa Flamingo got its name from? Well, its so-called name was born when the sand of Playa Flamingo beach turned very light pink, at a certain time of the year with the right weather conditions.
Playa Flamingo is known to be one of the most beautiful beaches in Costa Rica located 30 minutes away from the small town of Tamarindo. Many wealthy foreigners and local Costa Ricans nestled into the mountainous neighbouring areas and boast Playa Flamingo with its classic characteristics of a tropical beach, crystal clear blue waters, soft waves, and white soft sand. The thought of stepping into this beautiful little beach town feels more like a paradise!
That being said, Flamingo does not have a dedicated town however along the road, you'll find restaurants, hotels, a small plaza with banks, convenience stores, and more. Moreover, Flamingo offers tourists activities from ocean fishing to championship golf, scuba diving, sea sports, and even a stroll of the Santa Rosa National Park in proximity to Palo Verde.
Average Daily Rate: $222 Occupancy Rate: 65% Revenue: $2, 692
On the Guanacaste coast, nestles a black-sand beach town called Playa Danta on the Las Catalinas Bay, 15 minutes north of Playa Flamingo. Playa Danta is known to be a great spot for swimming and paddle boarding as its waves are soft and calm. Apart from that, there are other activities Playa Danta offers such as hiking, biking, and horseback riding. In addition, Playa Danta gives the tourist a taste of a blended mix of tropical beach and forest reserves all within the walking distance of each other.
With the recent developments in this beach town, tourists or vacationers can also reap the benefits of pedestrian walks and find themselves amazed by European architecture, fountains, and charming cafes.
Average Daily Rate: $213 Occupancy Rate: 54% Revenue: $2, 179
Just 30 minutes from Liberia's airport, nestled on the northwest corner of Guanacaste lay a luxury and secluded town of Papagayo known for its finest best and comfort that appeals to families and upscale gated communities.
This exclusive area is set apart from many of Guancaste's beaches due to the gated Peninsula, the beach is more protected and secluded from the public. That being said, if your niche is wealthy vacationers, investors or property managers may want to consider investing in this exclusive community as there are many vacation home options such as villas, luxury homes, and condos up for grabs. Not to mention, Papagayo offers outdoor activities like swimming, fishing, hiking, biking, and of course, a private golf clubhouse, tennis complex, and marine bar and restaurant.
On the southern Pacific Coast of Costa Rica lies a small town Bahia Ballena, known for its year-round water temperature, the perfect spot to enjoy whale watching and dolphins. Apart from that, 15 minutes south of Ballena is a world-class surf destination- Dominical characterized for its impressive waves.
Moreover, this laid-back charm and authentic town give travelers a breath of fresh air of natural beauty and amazing spectacles of nature from wildlife to tropical marine life. Adventure seekers gravitate to Bahia Ballena for adrenaline-pumping activities such as scuba diving, surfing, hiking, and more.
Furthermore, this charming town attracts a large ex-pat community, foreign buyers, and vacationers with its unspoiled beaches, breathless modern-day Garden of Eden, wildlife, and spectacular marine life.
Average Daily Rate: $217 Occupancy Rate: 67% Revenue: $2, 490
Situated between Jaco and Manuel Antonio lies a laid-back aura known for its best-kept secret undeveloped town, Esterillos Estes. This overlooking town is popular for its charming beachside, friendly locals, picturesque sunsets, and calm peaceful waters of the North Puntarenas. One of its primary attractions is horseback riding along the pristine sands of the Puntarenas coastline.
That being said, this unnoticed beach town is known for its luxurious and affordable vacation rentals. And if you are looking for a quiet getaway, Esterillos Estes will be the perfect spot for a peaceful and satisfying holiday.
Average Daily Rate: $58 Occupancy Rate: 34% Revenue: $495
Nuevo Arenal is situated on the Northeast side of Lake Arenal and is home to the most-active volcano where the perfectly stunning lakes and picturesque mountains surpass its scenery, wildlife, natural beauty, and Costa Rican charm.
This little charming town surprisingly offers a plethora of activities from selections of restaurants, shops, and nightlife options. Apart from that, the stunning lake of Nuevo Arenal has to offer is the perfect spot to go boating, kayaking, and paddle boarding along the pathway to hot springs and waterfalls within proximity.
And if you choose to lay back, why not enjoy a picnic at Lake Arenal park and relish its breathtaking scenery that simply feels like spring. In fact, you may even catch your breath with monkeys and exotic wildlife just right in town.
That being said, real estate in Nuevo Arenal is worth exploring as it is one of the fast-growing ex-pat communities and a hotspot for travelers, adventure seekers, and nature lovers.
Average Daily Rate: $127 Occupancy Rate: 47% Revenue: $1, 200
Located less than 30 minutes outside the city of San Jose lies the small town of Atenas known for its laidback, friendly, and peaceful atmosphere. Atenas is surrounded by green hills, coffee plants, and sugarcane. While it may not yet be on the tourist path, Atenas holds a special place for travelers as gives a glimpse of the rich Costa Rican culture and historic churches.
Moreover, Atenas has one of the best climates with its year-round mild temperatures and is noteworthy for its coffee, Atenas Central Park, and more. In fact, most of the local producers are family-run operations where some have the privilege to tour its operations and history.
Nevertheless, this small charming town is a great destination for travelers to unwind and enjoy the simple pleasures of Costa Rica without sacrificing the authenticity of the life of the locals and comfort.
Average Daily Rate: $150 Occupancy Rate: 53% Revenue: $1, 249