What You Need to Know About Private Lending in Costa Rica

If you are weighing this up for the first time, here is the whole thing in one place — why the market exists, what you would actually hold, what it pays, and what is expected of you.

Why there is a market at all

Because a large group of solvent property owners cannot use a bank. Bank credit in Costa Rica requires permanent residency, and that takes four years at minimum, which puts most recent arrivals outside the system no matter how much equity they hold. Add owners whose income is self-employed and properties that do not fit a bank template, and you have a steady supply of people who own real assets and need credit that is not available to them.

That gap is not a distress signal. It is a permanent feature of how this country works, and it is what a private lender is paid for.

What you hold

A first-position lien on a specific property, registered in your name at the National Registry, for an amount comfortably below what the property is worth. Ownership, boundaries and existing liens are public record here, so your position is verifiable rather than promised.

You are not buying a share of a fund, a participation, or a pooled product. One lender funds one file. That structure exists for a reason: lending your own money is not financial intermediation, which is the activity that requires supervision.

The terms

Loans start at $50,000 with no upper limit, run six months to three years, and pay 9% to 16% annually depending on what the individual file shows. Interest is paid monthly; principal comes back at maturity.

Closing costs run to roughly 8% of the loan between legal fees and GAP’s fee, and who carries them is settled before signing.

About that rate range

The instinct is to aim at the top of it. It is worth resisting. Well-cushioned files at the low end are available continuously; files at the high end are scarce, and scarce for reasons that are visible in the paperwork. A lender holding out for 16% spends stretches of the year with idle capital earning nothing, which quietly costs more than the extra points were worth.

The lenders who place the most money here work at the bottom of the range on purpose.

Who can do it

Anyone with capital. No Costa Rican residency, no local company, and you do not need to be in the country — a good share of lenders here have never visited the property they financed, and that arrangement works well.

What you decide, and what we do

We assemble the file: the Registry study with its liens and annotations, the appraisal, the owner’s documents, the company books if a corporation holds title, and the proposed structure. By the time it reaches you the verification is done — you are deciding whether the amount, the term, the rate and the security are acceptable. Nobody else makes that call.

Then the honest part: our work ends at closing. The borrower pays you directly. We do not collect instalments or monitor the property afterwards. We stay available and most lenders do call us, but the loan is yours to hold.

What can go wrong

A borrower can stop paying. An appraisal can be generous. Enforcement takes months and pays nothing while it runs. And your capital is committed until maturity — this is not an account you can draw on. The full list is here, with what reduces each one.

How people usually start

What the first conversation covers

Three things, and it is short. How much you are looking to place, since it sets which files are relevant. How long you can leave it, which decides the term and matters more than most people expect. And what you want the money doing — steady monthly income, or capital returned quickly to redeploy.

From there you receive files that fit, rather than a general pitch. There is no obligation attached to any of them, and lenders decline files regularly for no reason beyond preferring a different property.

Questions worth putting to us

Ask them. Nobody has ever been penalised here for asking too many. What is the appraised value and who prepared it? What does the Registry study show — every lien and annotation, not a summary? What specifically repays the principal at maturity? Who owns the property, and if it is a company, are the books and signing authority current? Why does this borrower need private money rather than a bank?

The last one deserves a specific answer, not a general one. There is a short list of legitimate reasons, and a file should be able to name which applies.

One last thing, because it comes up more often than any other question from newcomers: lending to friends and family is a different proposition entirely. The security is usually informal, the terms go unwritten, and the cost of enforcing them is a relationship rather than a legal fee.

If you have read this far and want the practical version, this covers how to begin — what to have ready, what the first conversation covers, and how quickly a first file can move.

One loan, watched for a few months, then a second decided faster, then the capital spread across several files with staggered maturities. That first year has a shape worth knowing in advance, and the open files are here.

Article by Glenn Tellier (Founder of CRIE and Grupo Gap)