Discovering Costa Rica, the start of an adventure…Part 3

By
Services for Real Estate Pros with The Oaks Tamarindo

I left off Part 2 on the verge of buying my "dream lot" in the Central Valley town of Santa Ana, west of San Jose and next door to Escazu, over an acre and a quarter of  land looking west, in a platted subdivision near the top of a small mountain. But, I couldn't get to the rest of my tale without some unconscionable delays.

 Life intervenes. Construction on my project, The Oaks, http://www.theoakstamarindo.com/, has advanced to the point of finishing the model unit. This is good news, as the first buyers will start moving in within 90 days. This is fun, as I saw in real life thefantastic results of the kitchen granite countertops and pure cedar cabinetry . This is bad news, as I saw in real life the results of the marble bath sink tops, and porcelain sinks. So, we tore out the marble in the baths, replaced it with granite, and replaced the white porcelain sinks with tempered glass sinks. Much better. And, I am finishing a trip, my fourth actually, down to Panama City for some real estate recon. Back tomorrow to Costa Rica.

What a difference between Panama and Costa Rica! Good and bad. Panama is in a full-on construction boom, burning with speculation fever. A new canal, high rises everywhere, units being bought by speculators from Colombia and Miami in groups of ten, twenty, thirty. Someone will make hundreds of millions of dollars. Just not me.  A part of me wants to, but I can't do it. Panama is Miami in the 1980's. Condo fever, no limits.  It's exciting, but when you sit down at the poker table and you can't identify the fish, chances are it's you. Tomorrow I'm going back to Costa Rica, the land of endless bureaucracy, where the government limits construction quite unintentionally with its myriad agencies and bureaucratic approvals, making an obstacle course game out of development. Bless them.

And so, on memory lane again, we're back in Santa Ana, looking at my dream lot for $115 per square meter, with full Setena and INVU approvals (sort of like Environmental Protection Agency approvals, only more complicated), ready to build with just another year or so of municipal approvals ahead. Slam dunk.

The sellers wanted $115 a square meter, which I knew from comps in the subdivision was a deal compared to recent sales at $140. However, they were in a divorce situation, and they accepted my offer of $105 a square meter, or just under $550,000, for a fast cash closing. The purchase price was just under 15% of my estimated gross sales proceeds from building three homes, so on the back of my envelope, the deal worked.

I promise you, my reader, (hello?), that next time I'll post a photo, maybe even a link, who knows? I'm new at this blogging thing, and I'll never catch up with you guys. But maybe I don't need to. I just need you guys to wonder; how can my clients realize success and happiness in Costa Rica real estate? How can I get referral fees for doing almost nothing? How can I earn commissions, not to mention free trips, by coming down to Costa Rica? (Hint: Unless you're hard core, maybe not in September or October. If you are hard core, we need to talk.)

Next installment....the laughably easy permitting process.

Comments (5)

Sky Realty
Sky Realty - Austin, TX
You must realy enjoy what you do
Aug 18, 2007 08:14 AM
Michael Eisenberg
eXp Realty - Bellingham, WA
Bellingham Real Estate Guy
Ok I wonder  ? How can I get referral fees for doing almost nothing? How can I earn commissions, not to mention free trips, by coming down to Costa Rica?  Tell me more.
Aug 18, 2007 09:05 AM
Robert Irvin
The Oaks Tamarindo - Igloolik, YN

Sky - You're right. It's a blast!

Michael - I wear two hats:owner of The Oaks, a 96 unit development between Flamingo and Tamarindo, 60% sold out, 2 BR/2 BA units from $140,000; and owner of Green Seal Realty, a real estate agency that sells environmentally friendly projects. If you simply email us a referral, we'll take his contact info and run with it, keep you advised thru copies, and pay you a 25% referral fee (standard Costa Rica 5% commission, sometimes more on land and lots). You did almost nothing. Or, you come down to Costa Rica with your clients and we share commissions with you 50/50. In addition, when you make your third sale from any of our listings, or your second sale from The Oaks, we pay for your trip up to $2,000, which includes your companion. Do it again, we pay again. So the "fly and buy" is not for the buyer, but for you, the agent. So, two options. Doing almost nothing, and making good referral fees, or having fun, earning commissions and getting free trips!

Aug 18, 2007 10:33 AM
Sean Allen
International Financing Solutions - Fort Myers, FL
International Financing Solutions

Hey Robert,

How do you all handle financing for the buyers? We have a new and exciting program for financing properties in Central America. It goes up to 90%LTV and uses the subject property as collateral. Full doc, Stated or no Doc all at 90%LTV.

Let me know if you would like some additional information on the program.

Sean Allen
The Mortgage Professionals
www.TheMortgageProfessionals.biz
Domestic and International mortgage solutions

Aug 25, 2007 04:19 AM
Robert Irvin
The Oaks Tamarindo - Igloolik, YN

Hi Sean,

I'm always eager to learn about financing options.

In Costa Rica, banks will finance buyers' purchase of homes in construction only after the bank sends an appraiser and makes a full physical and legal evaluation of the project. The best way to document the financing is through a credit trust agreement. The developer puts the home in trust with a trustee designated by the lender, the buyer takes out a loan with the lender, and the lender commits to make advances to the developer as construction advances.

Previous "gotchas' on financing offers that looked too good to be true are that U.S. assets are required,  that loans are available only on resales or sales of finished homes, or that loans are available only on primary residences.

After much work, I have my project, www.theoakstamarindo.com, qualified with three Costa Rica lenders, Banco Improsa, a respected private bank, Banco Cuscatlan, which is being acquired by Citibank, and HSBC. The best deal right now is with HSBC, 80% financing, 25 year loan, 7.75% fixed rate for 5 years, about 4% closing costs.

If you have a better deal, let me know! The 80% financing is plenty liberal, I really don't want my buyers doing U.S. style "no money down" when buying a second home or investment property in my project. But improvements in interest rates, closing costs and term would be welcome. 

Aug 27, 2007 01:55 AM

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