If you are moving to Costa Rica with savings, perhaps from selling a home, and want that money to produce income without taking on a business, private lending in Costa Rica is an option to consider. Here is how it works, what it pays, what can go wrong, and how it fits alongside your residency.
What private lending means
In a private loan, you lend your own money directly to a borrower, and the loan is secured by property. In Costa Rica, some property owners borrow privately because banks set their own requirements, which can make bank loans harder for newcomers. That demand is what creates lending opportunities.
Our sister company GAP Investments has been arranging these loans since 2008. It finds and reviews borrowers, and lenders decide which loans they want to fund.
How a GAP Investments loan is set up
- Secured by titled property. GAP lends only against titled property registered in Costa Rica’s National Registry.
- You are in first position. Any existing lien is paid off at or before closing, so your loan comes first.
- Borrowing is kept well below the property’s value. The maximum is 50% of the value, and around 30% or less is preferred. GAP determines the value used, with your input and acceptance.
- Loans from US$50,000, for terms of six months to three years.
- Monthly interest. The borrower pays you interest every month, directly, and repays the principal at the end of the term.
- You receive the full agreed rate. The borrower pays the loan fees, so they are not taken out of your return.
GAP Investments publishes lender rates from 9% to 16% a year. The rate depends on the loan: lower-risk loans generally pay less, and loans with more risk pay more.
Conservative or a little more risk
You can decide how careful you want to be. A conservative lender looks for a low loan-to-value, an improved property in a strong location and a clear repayment plan, and accepts a rate at the lower end. A lender comfortable with more risk may take a higher loan-to-value or a different kind of property for a higher rate. We explain the trade-offs in Conservative or higher return?
Why lending instead of a business
- No employees, so no payroll, no aguinaldo and no severance.
- No premises, stock or opening hours.
- You are not providing a service to customers.
- Monthly income arrives from the borrower directly.
For a newcomer who wants income rather than a business, that makes lending a simpler route than owning a company.
The risks you should understand
Lending is not risk-free, and no one should promise you it is. A borrower can pay late or stop paying. Recovering your money through the legal process takes time and costs money. Property values can fall. And the interest rate alone does not make a loan safe. That is why loan-to-value, property quality and the borrower’s plan to repay matter so much.
Rules that apply to lenders
SUGEF registration. If you lend as a regular, organized activity, expect to register with SUGEF under Costa Rica’s anti-money-laundering law. GAP Investments explains the process and offers a free SUGEF checklist.
Taxes. Interest you earn is income. Speak with a Costa Rican accountant about how to report it.
Residency. You do not need Costa Rican residency to lend through GAP, and lenders of any nationality are welcome. If you do live here, CRIE can check how lending income fits your residency category before you rely on it.
Frequently asked questions
How much do I need to start lending?
GAP Investments arranges loans from US$50,000.
Who collects the payments?
The borrower pays you directly every month. GAP arranges the loan through closing and can help if a problem comes up.
Is my return guaranteed?
No. The rate is agreed for each loan, but payment depends on the borrower. The property is your security if they do not pay.
Next steps
To talk about lending, WhatsApp GAP Investments at +506 4001 6413 or email info@gap.cr. For residency questions, WhatsApp CRIE at +506 8706 3888 or email info@crie.cr.
This article is for general information only and is not legal, tax or financial advice. Lending involves risk, including loss of principal. Confirm current rules with the relevant authorities and a Costa Rican professional before acting.