Puerto Vallarta or Costa Rica? Where Smart Investors Are Buying in 2025

Investing in real estate in a developing Latin American country such as Mexico or Costa Rica is an attractive option due to their popularity among travelers and retirees. A search of the listings of some of the more popular areas, such as Puerto Vallarta in Mexico, will show plenty of puertovallarta homes for sale as second homes or vacation rentals.

Costa Rica’s popularity as a real estate investment destination has also increased this past decade. The country’s relatively stable government is interested in attracting more foreign tourists and potential real estate investors.

While Puerto Vallarta and Costa Rica are both attractive destinations, there are several things that savvy investors need to consider before investing in real estate in 2025. Let’s take a closer look at both to help you decide which area is best for you.

Puerto Vallarta: An established destination with a foreigner-friendly real estate market

According to a recent Forbes article by business overseas reporter Kathleen Peddicord, Mexico is one of the most promising markets for overseas property investments. Several Mexican cities are still very attractive to tourists, retirees, and the newer but growing demographic of digital nomads. There is strong rental potential for properties in attractive, touristy areas such as Puerto Vallarta.

While Mexican property values have been steadily increasing, they are still relatively low compared to other areas. Buying property in Mexico also has a lower tax burden than buying property in the United States, Canada, or the UK.

Puerto Vallarta has long been a popular Mexican destination. Being a recognizable Mexican city has advantages for property investors, as it is one of the first places people will look when thinking about travelling or even living in Mexico. With a strong real estate market, Puerto Vallarta homes for sale attract buyers looking for beachfront properties, vacation homes, or investment opportunities in a desirable location.

The city of Puerto Vallarta is in the state of Jalisco, along the Pacific coast of Mexico. The city is built along Banderas Bay, one of the world’s largest natural bays, where the Sierra Madre mountain range meets the ocean. It is relatively easy to travel to, with around 20 nonstop routes from cities all over the US, and is only 600 miles west of Mexico City.

Foreign property buyers in Mexico will need a fideicomiso or Mexican bank trust. A fedeicomiso allows non-citizens to acquire and own coastal and borderline property in Mexico. The bank acts as a trustee and holds the title to your property, but you, the buyer, can occupy, rent, sell, or improve the property.

You will also need to pay the Predial or annual property tax. This tax is paid yearly in January or February and is .08% of the assessed value of the property.

Costa Rica: A beautiful, eco-friendly destination looking for foreign real estate investors

Costa Rica’s popularity as a destination for real estate investment has risen over the years. One reason is that it’s considered a great place for retirees from countries like the United States, Canada, and the United Kingdom. Costa Rica’s mostly tropical weather stays beautiful all year round. Foreignersliving in Costa Rica enjoy a low cost of living, affordable health care, and political stability.

Costa Rica is known for its rich coastline; in fact, the country’s name actually translates to “rich coast.” Costa Rica has a steadily growing upper-middle-class economy and a business-friendly environment. The country’s tourism industry strongly supports eco-tourism and sustainability, which means it attracts a wide range of potential renters—from nature lovers to adventure seekers to those just looking to enjoy a beautiful beach.

For about a decade now, buying property as an investment in Costa Rica has been rising in popularity. Both the residential and commercial real estate markets in Costa Rica  have been growing in sales and value, but the pricing is still reasonable compared to other tropical locations.

The most attractive part of buying property in Costa Rica is the fixed-rate property tax. The annual property tax is 0.25% of the property’s value. A property transfer tax of 1.5% of the property value also exists. This is usually split 50/50 between the seller and buyer.

Costa Rica gives both its citizens and expats the same property-buying rights. Foreigners buying property in Costa Rica own the property, the exception being property on beachfront land, of which the state will own 50%.

Whatever location sounds more attractive to you, you should work with a reputable local real estate agent such as Nu Home Realty Co. Being experienced with the local real estate market, they can provide you with a list of attractive and well-maintained properties to invest in. They can also help you navigate the market and =ensure that any financial transactions you make are legal and above board.