How to Start Private Money Lending in Costa Rica
Private money lending in Costa Rica is something more people are exploring — and the interest makes sense. Costa Rica has an active real estate market, consistent demand for short-term private financing, and a legal framework that allows private individuals to lend against property in a structured, enforceable way. If you have capital to deploy and are curious about what this actually involves, this guide covers the fundamentals.
What Private Money Lending in Costa Rica Actually Is
Private money lending — also called private lending, hard money lending, or asset-based lending — involves an individual lending their own capital to a borrower, with the loan secured against real estate. In Costa Rica, this is typically structured through a fideicomiso de garantía (guarantee trust), which gives the lender a legally enforceable first-lien position against the collateral property.
The key distinction from bank lending is that the private lender‘s decision is based primarily on the value and quality of the collateral — the property — rather than on the borrower’s credit score or income documentation. This makes private lending accessible to borrowers who cannot qualify at traditional banks, and it means the lender’s primary protection is the asset rather than the borrower’s credit profile.
Who Borrows From Private Lenders in Costa Rica?
The borrowers in Costa Rica’s private lending market tend to be property owners with a genuine short-term capital need and qualifying real estate. Common situations include:
- Expats and foreign nationals who cannot qualify at Costa Rica banks (which require permanent residency to open a bank account — a process that takes around four years)
- Property owners who need faster access to capital than bank timelines allow
- Developers or investors bridging a gap between a property transaction and longer-term financing
- Business owners using property equity to cover operational or expansion needs
How the Process Works
A private lending arrangement in Costa Rica typically follows this sequence:
- Loan request and file review. A borrower submits a request with relevant property documentation. The lender (or a coordinator like GAP Investments) reviews the file to assess the property, the loan-to-value ratio, the title status, and the borrower’s situation.
- Lender decision. The private lender reviews the opportunity independently and decides whether to participate, and on what terms. No one dictates terms to the lender — that decision belongs entirely to the lender.
- Legal structuring. If the lender agrees to proceed, a Costa Rican attorney structures the guarantee trust and prepares the loan documentation.
- Disbursement. Funds are disbursed once legal formalities are complete. Timelines depend on the complexity of the file and the legal process involved.
- Ongoing management and repayment. The borrower makes payments according to the agreed schedule. At the end of the term, the loan is repaid and the guarantee trust is released.
What Private Lenders Need to Understand Before Starting
Private lending in Costa Rica carries real risk. This is not a savings deposit or a guaranteed instrument. Key considerations:
- The collateral is your primary protection. If a borrower does not perform, the lender’s recourse is the property. The legal enforcement process in Costa Rica takes time and involves cost.
- Liquidity is limited. Private loans are not liquid instruments. Your capital is committed for the term of the loan.
- No outcome is guaranteed. Every lending arrangement carries risk of non-performance. You should only deploy capital you can afford to have locked up and, in a worst case, at risk.
- Professional legal and financial advice matters. A qualified Costa Rican attorney and your own tax and financial advisor should be part of any serious private lending arrangement.
How GAP Investments Fits In
GAP Investments connects private lenders with property-backed lending requests in Costa Rica. We do not dictate terms to lenders, guarantee outcomes, or promise specific returns. Each opportunity is presented for independent review, and lenders make their own decisions about whether and how to participate.
If you are interested in exploring private lending in Costa Rica, learn how lending with GAP works or reach out to discuss a specific opportunity.
Frequently Asked Questions
How much capital do I need to start?
Typical private lending requests in Costa Rica start at US$50,000. This reflects the transaction costs — legal, structuring, and notarial — that make smaller arrangements less practical. Some arrangements are significantly larger.
Do I need to be a Costa Rica resident to lend privately?
No. Many private lenders in the Costa Rica market are non-residents who hold their investments from abroad. The legal structure allows for foreign nationals to participate, though the specific tax and legal implications in your home country are something to verify with your own advisors.
What happens if a borrower defaults?
The guarantee trust structure gives the lender a legal mechanism to initiate enforcement proceedings against the collateral property. The process is handled by Costa Rican attorneys and takes time — this is part of why careful underwriting of the collateral and loan-to-value ratio matters before committing.
This article is for general information only and is not investment, legal, or tax advice. All lending and investment decisions should be made based on independent due diligence and with qualified professional guidance.
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Article by Glenn Tellier (Founder of CRIE and Grupo Gap)
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