I share with you comments that I hope will be informational and helpful
concerning real estate to you , your family and friends . My comments are
based on my personal perspective of the real estate market in Costa Rica .
If you are selling your property during this economic time you may
strongly want to consider owner financing . The reason is - before the downturn
which we are all aware of - most American buyers paid cash to purchase.
Currently- the majority of buyers would like some type of financing - preferably
owner. Bank financing is available in Costa Rica but is more difficult than owner financing
and you pay the bank higher fees. If you tell the bank you are self
employed - like American banks - what is your blood type.
Why And How
Financing makes the purchase more appealing to the buyer and enables them
to buy which might not happen otherwise. If you do finance I would
recommend short term - 3----5 years. You can opt to extend after the time period
but at your option . If the buyer has made payments on time , kept the
property insured which should be a requirement and has taken care of the
property - you may want to extend .
Down payments I have done with owner financing range between 20-50% .
Whatever is your comfort level is what you should do. The down-payment should
be your safeguard for at least a two year period in case something happens. You can amoritize over 20-25- 30 years or less with the balance due at the
end of five years .
Your particular situation is important in the decision to finance. If you
need to cash out- then you have no choice. If you do not need all cash -
then a return may be something to consider .Property, of course , should be
free and clear.
I am currently working on an owner financing deal. The sellers do not need
the cash and did not think about owner financing - after our discussion,
they like the idea. Several reasons are 1) easier to sell 2) a return on
their money- they are the bank 3) take the sale price - take your monthly
payments you are going to receive over a five year period and add those
payments to the sale price - your actual sale price is a lot higher because in
any five year loan the buyer is paying practically all interest and the loan
balance is due after five years . The actual sale price number will
pleasantly surprise you .
This is the way banks made their fortunes until they forgot to get down
payments and make good loans.
There is always a risk and I would never tell you different. That is one
reason why I suggest short term and renewal at your option . Control as much
as possible what is going on .
Interest Rates - Costa Rica - I have seen 7% -- 12% for owner financing-
Here in Costa Rica - mortgages are registered and a satisfaction has to
be entered to clear the mortgage lien. You have a lien on the property
until such time it is cleared.
Correctly and legally are important points
As stated earlier,this is my perspective- I am sure many of you would have
interesting comments as well and your comments are respected and welcome.
Thank You and Best Regards - Rudy