Renting our Home as a Costa Rica Vacation Rental Property
We decided to use our home as a Costa Rica vacation rental property. It has been some time since I reported on my experience with buying property in Costa Rica and living there. I thought it would be useful to give you an update.
My wife and I are not yet at the point of retiring fully. But are rapidly approaching that time. Our purchase of property in Costa Rica was a preliminary step in that direction. Since we do not use our property ourselves all that much, our plan was to rent it as a vacation rental. Then we’ll be able to recover some (or if possible, all) of the costs.
Our home is located in an area that GoDutch Realty or their affiliates don’t service.
Things started out quite slowly. It took some time to get registered on rental sites (HomeAway and Tripadvisor, currently). I considered using local real estate agents for sourcing potential tenants. But after checking with them, there did not seem to be much interest. I was not surprised, since our experience when we purchased our property was also that they were not helpful. But that’s a story for another time.
For some time, there were no inquiries, and it was somewhat discouraging. I started comparing my advertisement to other vacation rentals in the area. I felt that the fact I had no reviews was a major factor. So I dropped my rental price to rock bottom, despite the fact that our house is in pristine (ie, brand new) condition. And it’s close to a reasonably attractive location, with much tourist interest.
I finally received an inquiry and pounced on it, offering a very attractive rate for the period. I let the potential renter know that my major goal was to have him leave a high rating on the vacation rental website. If anything was not to his liking, I asked him to let me know. Then I would do my best to resolve any issue. I contacted my housekeeper’s daughter in Costa Rica by email about the dates. Then I waited for the arrival date of the renter. I sent off an email the first day of their rental, to ask if everything was in order. And to let me know of any difficulties. All was fine!
After the renter left, I reminded him about the review of the property. He left a five-star rating!!
However, I need to report that in a separate email, he sent me a list of shortcomings about our vacation rental. Most of which would have been minor concerns in a 5-star North American hotel. And certainly quite minor for a property in Costa Rica, which he rented at a rock-bottom price.
My second renter was an expat who was building a house in the same development. So I gave a very low quote, again on the basis that they would leave a good review for my vacation rental. Please note that I always let my renters know that I expect them to be honest about their comments. But I also let them know that I am aiming for high reviews. At the same time, I ask for the opportunity in advance. Then I can fix any issue that would stand in the way of a 5-star review.
So, now I have had 5 or 6 rentals, and all reviews have been 5-star. I am now receiving regular rental requests. Our house is rented for a week or two most months from now until December. We’re already almost fully booked from mid-December until the end of March.
I have kept the rental rates very low, but let all potential renters know that my goal is to retain a very high rating on the rental websites. And, I ask them to let me know if anything will stand in the way of this objective. I am close to recovering the full annual cost of the property (including mortgage interest). Soon, I plan to raise my rates, which are still well below other properties in the region.
Are you also planning to rent out your vacation home? Then keep in mind that you have to charge Value Added Tax (VAT or IVA) on your rental. Talk to your accountant about this.
In my next blog, I will provide some tips on what I have learned about making the situation work. Learn what you can do to become a landlord with a profitable (or at least break-even) vacation rental property.
I have named this author John Doe, as he doesn’t want the people in his community to know who he is. John bought a property from an International Living real estate developer. When assisting in a Cancun International Living Conference, while washing my hands in the men’s room, John asked me “are you Ivo? I always read your blogs”. So I asked John to write a couple for us. These two blogs and two others are the results of our conversation then. Thanks, John!
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I DO want to remind our readers that we appreciate any referrals you can send us. Also, when talking about your home in Costa Rica, please remember the GoDutch Realty agents. We appreciate it.