| Investments in Costa Rica?... isn't that an | | | | experiencing a VERY strong economy and a very |
| island?...somewhere in the Caribbean? | | | | strong currency) and Europeans... who are also |
| My wife and I moved to Costa Rica six years | | | | experiencing gains with the rise of the euro vs. |
| ago from the frigid climate of Minnesota where | | | | the dollar and other currencies. The Costa Rican |
| we had owned a printing business for 15 years. | | | | real estate market is simply not dependent upon |
| For as long as we could remember we had | | | | one country or group of people to experience |
| worked 12 hour days and spent most of our time | | | | strong real estate interest. And please also keep |
| figuring out how to stay even...getting ahead | | | | in mind that Costa Rican real estate is a |
| wasn't even in the cards. | | | | microcosm of Economics 101...the areas of |
| Then 9/11 happened. And for us it was an | | | | interest for the "boomers" and second home |
| epiphany. Life was too short to spend the balance | | | | buyers are small and it is easy to see that there |
| of our lives on a treadmill that went nowhere. We | | | | are more buyers than sellers (which is really what |
| accelerated our retirement plans by almost ten | | | | the markets are all about... remember our KISS |
| years. | | | | theory?) |
| And over the next year we sold everything we | | | | We have established statistically that more and |
| owned and eventually found ourselves in Costa | | | | more visitors are arriving in Costa Rica. Now we |
| Rica (which, mind you, we had only visited once | | | | need to establish a base for our investment |
| previously...and on vacation at that !). | | | | philosophies...and it is primarily centered upon the |
| Stupid? In retrospect, sure. To move to a foreign | | | | huge number of "baby boomers" which are just |
| country where we knew no one, didn't know the | | | | beginning their retirement years. We do not need |
| language and our only exposure was the internet? | | | | a huge elaboration as to why "boomers" are |
| Of course, it was stupid. | | | | examining overseas destinations in increasing |
| But...we loved it, even in spite of the fact that life | | | | numbers...but here are a few of the major |
| here was completely different than the books | | | | reasons: |
| portrayed or the internet showed. We rented a | | | | - Cost of living...it is no surprise that costs of |
| small home about an hour outside of San Jose in | | | | almost everything are climbing daily. The |
| a community which was rural, coffee country and | | | | equivalent cost of living in Costa Rica is roughly a |
| yet still large enough to have a hospital and within | | | | third as much. |
| 45 minutes of the main airport. | | | | - Medical care is excellent and only at a fraction of |
| And we purchased land...and we built a house. And | | | | the cost. |
| luckily, Rhonda had the temperament to deal with | | | | - There is a tremendous amount of diversity here |
| the local builders, even though we didn't | | | | and an almost unending list of activities and |
| understand much Spanish. I still remained a type A | | | | sightseeing which is available daily...you will definitely |
| and the manana attitude drove me crazy. | | | | never be bored! |
| And much of the real estate and construction | | | | - Stable government and environment. |
| business was definitely not in any "how to..." book | | | | - High literacy rate and people are genuinely |
| that we ever found. And we definitely made | | | | friendly. |
| mistakes. But luckily they didn't hurt us TOO | | | | - Only a short plane ride from the States. |
| much financially. And we asked a lot of questions | | | | - Infrastructure is good and water is drinkable |
| and we learned, little by little, how the real estate | | | | everywhere in the country. |
| market functioned in Costa Rica. | | | | - The banking system is excellent and safe. |
| And we decided that we wanted to let others | | | | - There is a huge amount of flora and fauna here |
| know the things that we had to learn the hard | | | | which is literally unequalled anywhere in the |
| way. We started a real estate company whose | | | | world...and over 25% of the country's land is set |
| sole aim was to present properties which | | | | aside for national parks. |
| reflected prices that locals paid...because there is a | | | | - Land and construction is still extremely |
| two tier real estate market in Costa Rica...one for | | | | affordable by comparison. |
| "gringos" and one for Ticos (locals, as Costa | | | | - Crime is still relatively low, especially when |
| Ricans call themselves). | | | | compared to its counterparts and "competition". |
| Because there are very few rules or regulations | | | | Okay, now that we have established that Costa |
| for real estate here, our "exposure" of the | | | | Rica is a viable, growing and stable marketplace |
| market didn't make us very popular with other | | | | AND that the "boomers" have the potential to |
| real estate people. (remember, Costa Rica is a | | | | have a major influence on the marketplace in |
| VERY small country...about the size of West | | | | Costa Rica...let's pinpoint specifics which will allow |
| Virginia or Houston). So our website didn't exactly | | | | us to make significant investment gains: |
| endear us to local agents who were used to | | | | Most "gringos" say that they would prefer beach |
| charging whatever prices and commissions that | | | | living. The reality is that over 50% of all people |
| they thought the traffic would bear. | | | | who buy on the beach sell within five years. We |
| And slowly we began to get a | | | | have found over the past five years that most |
| reputation...admittedly, some was good, some | | | | gringos prefer acreage with the following features: |
| bad...depending upon who you talked to. And we | | | | - Views...either the ocean from a distance or the |
| began to get publicity...unsolicited publicity from | | | | Central Valley |
| magazines like Newsweek and Investors Business | | | | - Access to good medical and professional |
| Daily. And our business grew. And grew some | | | | services |
| more. | | | | - Not "too remote" |
| As our business grew we began to meet more | | | | - Good shopping and dining accessibility within a |
| people from Costa Rica...some influential, some | | | | reasonable drive. |
| not... some quality, some not. And we became | | | | - Internet availability...good infrastructure |
| exposed to many more types of investments | | | | - More moderate temperatures |
| that were totally foreign to us. And we learned | | | | - More rural than urban but still amenities available |
| who really "controls" the country and which people | | | | closeby |
| control investment capital and have the influence | | | | - Within a "reasonable" drive to an international |
| to make policy. To illustrate how much of our | | | | airport. |
| education was "coincidence" (and I personally do | | | | - Private, but not too private; i.e., neighbors |
| not believe in coincidences... I believe that they | | | | nearby but not TOO close. |
| happen for a reason) our third attorney was | | | | - At least half to an acre of land...river, waterfall |
| introduced to us purely second hand at a local | | | | or lake if possible. |
| gathering; "coincidentally" his wife was from | | | | - Fruit trees and other vegetation a major plus. |
| Minnesota...Rhonda was then invited to a weekly | | | | With the above in mind, Rhonda and I settled in |
| gathering of "gringas", all of which married Ticos | | | | Grecia which was approximately half an hour |
| 35-40 years ago and who have now ALL become | | | | from the country's major airport, 45 minutes |
| very influential ; e.g., Minister of Finance; Minister of | | | | from a first class hospital (yet only 10 minutes to |
| Agriculture and two other former cabinet | | | | a municipal hospital, in Grecia). We chose to be in |
| members. | | | | the mountains overlooking the town and the |
| Because of our real estate organization (see it | | | | Central Valley. Major shopping was 45 minutes |
| here: we are able to see daily what people are | | | | away as was "better dining" and (for me) |
| seeking and watch the ebb and flow of interest. | | | | bookstores. Notice how we fit the above "profile"? |
| And not only are we able to gauge areas of | | | | BTW, we also had a river on our property. Why |
| interest but also types of properties or homes | | | | do we bring this up here?...because our "property |
| that are attracting the most interest...e.g., we | | | | preferences" were (and are) the same as 80% |
| know that beach properties or condominiums at | | | | of most gringos that move to Costa Rica to |
| present are receiving very little interest and the | | | | retire (full or part time.) |
| high end beach properties sales are very slow. | | | | Next factor: there are very very few rules and |
| We have our own hypotheses as to why this is | | | | regulations when it comes to real estate and |
| occurring but we are dealing with "what is", not | | | | construction in this country. There are ways to |
| what we think "should be"...nor do we look for | | | | protect yourself legally but there are no sure |
| esoteric explanations to explain the status. We | | | | methods of ascertaining what is a "fair and |
| are big believers in the KISS philosophy..." keep it | | | | honest" price. There is no MLS system and there |
| simple, stupid." | | | | is not a system of comparables. For the most |
| Over the past three years we have made a | | | | part, real estate is bought and sold the way it has |
| number of investments here...none have shown a | | | | been for decades...primarily word of mouth. This is |
| loss and others have turned a 100% return within | | | | specifically why people flock to the real estate |
| a 60 day period. Some have unrealized profits. | | | | industry...because of "net selling" or the simple fact |
| We have yet to take a loss. Please understand | | | | that it is almost impossible to know what is a fair |
| here that we are not professional investors (if | | | | price. (net selling refers to "marking up" a |
| there indeed is such an animal)... we have simply | | | | property over and above what the seller wishes |
| taken advantage of situations that we consider to | | | | to "net...very commonplace here.) |
| be extremely low risk. WE ARE NOT SIMPLY | | | | Next: There are very few American style houses |
| "HOPPING ON THE COSTA RICAN REAL | | | | for sale here... and Tico houses simply are not |
| ESTATE BANDWAGON"...because if we had done | | | | satisfactory for 98% of "gringos" that move here |
| that, we would have already lost a significant | | | | (lower ceilings, smaller rooms, not enough land, no |
| amount of money. | | | | 220V power, no views, etc). This obviously brings |
| Let me explain... | | | | up the logical conclusion...if there is a market, and it |
| Our website and mission statement is all about | | | | appears that it is highly skewed in favor of the |
| value...and it is about education and knowing "the | | | | sellers...is there an opportunity here to capitalize on |
| good, bad and ugly" BEFORE buying. Too many | | | | that imbalance? (for those of you who are |
| people get caught up in the emotion and beauty | | | | thinking ahead here...remodeling is difficult because |
| of Costa Rica and buy on impulse. And these are | | | | almost all construction here is block and steel and |
| the people that ultimately run the risk of losing | | | | all wiring and plumbing is encased in |
| their entire investment. (con men and fraud exist | | | | concrete...remodeling costs actually exceed |
| everywhere but are more common here simply | | | | "STARTING FROM SCRATCH".) |
| because of the lack of comprehensive rules and | | | | Because there is a two tier market here...one for |
| regulations concerning real estate and | | | | locals and one for "everyone else" it is important |
| construction). That being said...we attract a | | | | to ensure that pricing received is comparable to |
| different type of clientele...one that typically wants | | | | others of comparison (as much as possible in a |
| to ensure that he gets the most value for his or | | | | country where "comparables" are simply |
| her money....and definitely not one that is an | | | | conversation over coffee.) A "gringo" certainly can |
| impulse buyer. We deal primarily with the "baby | | | | look for his or her own property but it is almost a |
| boomer" who is looking at Costa Rica as a | | | | guarantee that prices will be at least 50% higher |
| retirement destination AND the buyer who wants | | | | as locals share the common perception that |
| to ensure that he or she gets the most value for | | | | "gringos" have money trees "back home" and that |
| their investment. | | | | we will pay almost "any asking price" because we |
| And the above paragraph illustrates the best, | | | | don't know the culture or the area. |
| most concise reason why our business is almost | | | | And remember we know the markets...who is |
| recession proof and not affected by the | | | | buying, what they are seeking and what they will |
| "subprime crisis" and will allow us to continue to | | | | pay. And then obviously the determination has to |
| capitalize of various forms of investment in Costa | | | | be made if it is possible to make a profit. |
| Rica. | | | | The last item to take into account is the simple |
| So...now that we have established our | | | | fact of Costa Rican land itself...without the "gringo |
| background...WHY are we recommending Costa | | | | factor". Ticos (Costa Ricans) are accustomed to |
| Rica as a basis for specific types of investments? | | | | an inflation rate of around 12% annually and many |
| We are not attempting to "sell" Costa Rica | | | | compensate by buying additional land and simply |
| because we expect anyone who is examining | | | | holding hard assets. And when selling, Ticos know |
| Costa Rica as an investment to do their own due | | | | that if they do not get their price today...they will |
| diligence. So... | | | | in six months or in a year. The trick then |
| - Costa Rica is home to the longest running | | | | becomes to truly know the markets and to be |
| democracy in Latin America. Its stability is | | | | able to take advantage of buyers that MUST sell |
| unquestioned and it is allied closely with the U.S. | | | | and that need money. |
| - Almost a third of the land mass of Costa Rica is | | | | On to "brass tacks" and specifics... |
| set aside for national parks. Costa Ricans | | | | 1. The void of, and lack of, American style houses |
| themselves are huge lovers of wildlife, flora and | | | | in many areas is crying to be filled. The following is |
| fauna. | | | | a quick "down and dirty" summary of |
| - There is virtually no mineral exploration and | | | | approximate profits to be made from such an |
| absolutely no oil drilling in Costa Rica for | | | | investment: Land cost: (one acre...view property in |
| environmental protection. | | | | Grecia or environs) $50,000; American style |
| - The literacy rate in Costa Rica exceeds that of | | | | house of 3 BR, 1500-1600 sq. meters: |
| the States or Canada. | | | | $75,000...misc costs including architect, utilities and |
| - Medical care is superb and available to | | | | landscaping: $10,000. Selling price: $190-195,000, |
| everyone...even to those who are unable to pay. | | | | possibly more. Estimated gross ROI (before |
| - Costa Rica is more familiar to Americans than | | | | payout to limited partner or construction |
| nearly any other foreign destination...for vacation. | | | | supervisor)...50%. |
| Nearly everyone who has visited Costa Rica | | | | 2. Smaller developments can be even more |
| wants to return and, in fact, Costa Rica has the | | | | profitable...we prefer to stick with a much smaller |
| highest return rate for vacationers of any other | | | | number of homes as it is more manageable and |
| destination in the world. | | | | you fly under the municipality's radar...nothing illegal, |
| - While Costa Rica is technically a "second world | | | | just avoiding the possibility of locals swarming |
| country", its infrastructure is excellent. | | | | around with their hands out. Typically, we raise |
| - Costa Rica's economy, while operating at a | | | | money in smaller increments (shares) as the |
| deficit, is in excellent shape. | | | | amounts normally exceed $250,000. |
| - Costa Rica has no standing army, thus expends | | | | Profit estimates here are extraordinary. |
| no funds on a national defense. | | | | 3. Oftentimes, at least bimonthly, we see a |
| - Costa Rica espouses family values and many | | | | property at an extraordinary price...one that we |
| visitors liken it to the States from the 50s. The | | | | know is substantially below market value. |
| pace of living is slower and the Costa Rican | | | | Sometimes these properties can be resold almost |
| people (Ticos) have different values than their | | | | immediately...other times they involve buying a |
| counter parts in America and Canada. | | | | larger piece and reselling smaller units of land. A |
| - There are literally dozens of microclimates within | | | | good example is a block of four quarter acre |
| a two hour drive from anywhere in the country. | | | | beach front parcels which are titled and located |
| Where else can you drive for a day and see two | | | | only 1 ½ hours from San Jose on the |
| oceans, several volcanoes, sandy beaches, | | | | Central Pacific coast. The owner is in the States |
| mountains, waterfalls, lakes, rain forests, cloud | | | | and is admittedly desperate. The units can be |
| forests, agricultural land, hot springs, wildlife | | | | picked up as a whole and resold for at least a |
| preserves, and much much more...? | | | | 50% profit (our opinion). They are RARE and |
| - Cost of living estimated at approximately 30% | | | | gorgeous. |
| of equivalent lifestyle cost in the States or | | | | 4. Recently, we were contacted by the owner of |
| Canada. | | | | a small house in Grecia. We had previously listed it |
| - An estimated 30% of the population speaks or | | | | at a decent price...but no takers. It has a gorgeous |
| understand some degree of English. | | | | view and the house needs probably $5000 |
| This is only the abbreviated version of the | | | | worthy of work. In our opinion, the owner is now |
| positives of Costa Rica...other countries such as | | | | willing to sell for close to land value only. Not a |
| nearby Panama, Nicaragua and Mexico are | | | | huge winner, but percentage wise, probably a |
| attempting to woo the "baby boomers" but OUR | | | | 50% profit is available. Estimated ROI to the |
| belief is that the "blue chip" of Latin American | | | | investor...50%+ |
| investment will almost always win out. Just | | | | 5. Occasionally we are shown properties which |
| because land in Nicaragua or Panama maybe 20% | | | | have a "glitch" in their titles...not major problems |
| cheaper or because the government offers one | | | | but simple filings to correct them. "informacion |
| time incentives to expats....does not necessarily | | | | processoria" properties are normally those which |
| mean that it is worth the risk of your hard | | | | have passed down from family member to family |
| earned savings. Weigh the pros and cons. Some | | | | member over the years without doing proper |
| say that Costa Rica is overpriced...some say that | | | | registration or filings. It is a simple matter for a |
| its time has passed for investment...we say "take | | | | competent attorney to correct the oversight |
| a look at the number of people that visit here...and | | | | (and, in many cases, it was simply not done for |
| that return...do your homework...then make your | | | | lack of funds). These properties can oftentimes |
| decision." | | | | be had at substantial discounts. A good example is |
| Okay, we have subjectives about Costa Rica and | | | | a property currently being offered of nearly two |
| why people visit here and keep returning. Now we | | | | acres just on the outskirts of San Jose...a suburb |
| need facts. | | | | called Aserri. The property HAD to be sold (family |
| During the first six months of 2008, more than | | | | financial emergency)...asking price was actually less |
| 125,000 foreigners visited Costa Rica...and this is a | | | | than 20% of what comparable properties were |
| 16% increase over last year. And remember, this | | | | currently selling for ADJACENT to this property. |
| is in a so called recession which is worldwide. Don't | | | | Estimated "fix" time is six months...properties like |
| believe that the trend will continue?...try this: ask | | | | this do not often surface and, most of the time |
| your friends what their impressions are of Costa | | | | they are "no brainers". |
| Rica or what they have heard ABOUT Costa Rica. | | | | Now, we are the first to admit that 99.9% of |
| I can guarantee that the responses will be | | | | people that read about these investments are not |
| overwhelmingly positive. Subjective ? Yes, but still | | | | able to do them themselves. This is why we have |
| highly convincing and you will not get these types | | | | typically set up "arrangements" or agreements to |
| of responses from any other location or | | | | handle the everyday details and carry the project |
| destination. | | | | from start to finish. Obviously, investments such |
| Numbers of weekly airline flights are | | | | as the Aserri property, or others that are shorter |
| climbing...ranging from American Airlines with 43, to | | | | term investments that can be resold quickly, do |
| Continental with 25, Delta with 24 down to Spirit | | | | not need "special handling". |
| and U.S. Airways each with 7. This does obviously | | | | Hopefully, this investment overview has sparked |
| not take into account visitors from other parts of | | | | your interest. We have met nearly all of our |
| the globe. Currently, the States and Canada | | | | investors...some before the physical and actual |
| account for over half of all visitors and tourists to | | | | investment, other afterward. We have an annual |
| Costa Rica. Europe accounts for nearly 20% and | | | | pigroast in January and typically nearly all of our |
| the rest of the world, the balance. This is another | | | | investors along with friends and neighbors from |
| good rationale why our business is expanding | | | | Costa Rica get together for fun and an overview |
| instead of collapsing like many of the local pundits | | | | of each investment status. In the past it has been |
| have predicted...the slowdown in the States is | | | | a huge hit...plus of course, it is a great excuse to |
| more than counterbalanced by Canada (which is | | | | come to Costa Rica. |