• I recently had an inquiry about purchasing an ocean-front property in Costa Rica? More and more Canadians are looking at investing in this beautiful country – I myself am very interested but holding off due to the dollar.

    Living in Canada and especially in the eastern provinces, where it can get down to minus 40 or below, some of us tend to dream about living near the Ocean, in much warmer climates. I know I do! However, the question becomes is the reality a dream or a nightmare waiting to happen?

    Being a real estate investor myself, I tend to be on the conservative side when it comes to my investment properties because the end result comes down to cash flow and protecting my investment.

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    Of course there are many positive reasons for living near the ocean and owning an oceanfront property! Who doesn’t dream of waking up to the sun shining almost year round and the sound of the waves crashing and the birds chirping in the nearby trees. But is that really the reality?

    Now let’s look at the opposite side of the coin. With climate change high on the agenda of every government, sea levels rising, and coast lines generally first to feel the brunt of weather related events, which increase year after year, more property buyers are reconsidering that dream for higher ground. Furthermore, existing property owners are facing an affect on resale values and properties in some cases that are difficult to sell at all.

    Unfortunately the off-shoot of purchasing a property near the ocean, also means higher insurance premiums and higher risk of damage. For instance, If the property is in a hurricane zone, such as Florida, or even in our own backyard in Newfoundland, Nova Scotia or PEI, you are more apt to pay out-of-pocket expenses to fix your property on a yearly basis, just from hurricane damage alone. While Costa Rica does not experience direct hits by hurricanes, it is still a higher insurance premium or higher cost to purchase near the ocean – as it would be in any oceanic area!

    Furthermore, you have to also take into account paying for property management (if it’s a rental property), general maintenance and possible damage from renting it out, the cash flow may be low or non existent, which is a big hit on your bottom line.

    The even bigger problem lies now in funding such properties as flood claims from ocean-front properties have hit an all-time high and lenders are now seeing these properties as a higher risk than it may be worth. If you are lucky enough to get funding, plan on putting at least a 35-50% down payment, depending on location. While there are only 1-2 lenders in Canada that will lend on ocean-front properties, those with a higher down payment and income to substantiate the perceived risk, should qualify for funding.

    While we cannot control what Mother Nature does in these hotbed areas – we can control where we buy. Unfortunately, while we may still desire ocean-front living, mother nature may have other plans and may turn our dream into a nightmare!