[Richard Bexon]
Good morning, Ben, how are you doing?
[Ben Pack]
Good morning, thank you, I’m doing great.
[Richard Bexon]
Awesome, we finally got to do a podcast together. I know it’s been a few, I would say months, maybe years coming from a variety of different people that know each of us that were like, yeah, you guys should do a podcast at some point.
[Ben Pack]
Yeah, I’m so glad that we’re doing this. It has been a long time coming, but it’s been interesting to see how the market has changed during that time and things are accelerating in many areas. So yeah, this is great, thank you for doing this.
[Richard Bexon]
I know, it’s an absolute pleasure. Ben, I mean, the first question I’d love to ask everyone is like, you know, I mean, I think that the markets, the volatility in markets is now stabilizing, meaning that we’re now used to volatility, if that makes sense, it’s kind of the new normal, you know, and it’s probably gonna stay here for a while, but like, how has that impacted kind of your work number of inquiries you’re getting like from the Vololoans point of view?
[Ben Pack]
You know, it’s interesting, this being the slower time of year, right, rainy season, we have still seen an uptick in the volume. We’ve actually knocked over some pretty big milestones as a company, and most recently closed on a new debt facility that enables us to continue to fund a large amount of loans. And it’s a $50 million debt facility that we can turn and turn and turn and continue to sell off loans into the secondary market on Wall Street.
So when we look at where we were at when we started a few years ago versus where we’re at today, you know, I think everybody would agree tourism has slowed just a little bit this year. Yep. Homes have slowed just a little bit, but we’ve seen really historic increases in the rates of appreciation.
So people are sitting on a lot of equity. And one thing that we brought to the market is liquidity. People that have had to pay cash in the past, now you can finance.
You only need at minimum a 25% down payment. And if you paid cash for a house, well, shoot, you can access that equity. In fact, we closed two loans last week where both of them, one was paying off seller financing, one had paid cash for their property.
They were both pulling money out to then turn around and buy an additional property. So that’s, you know, we’re seeing people access that equity right now and put it to use. So in that aspect, we’re seeing an increase.
The purchase market, you know, it’s moderated a little bit. It’s leveled a little bit, but I think seasonality plays into that as well, you know.
[Richard Bexon]
Yeah, I mean, it’s gonna be an interesting, you know, up and coming high season for 2026, just to see what it really looks like. I mean, you know, I’m in touch with a lot of hoteliers here and things are a lot tougher than they thought it would be this year. You know, I mean, we said it at the end of 2024 of what this year was gonna look like, you know, from 6% to 8% reduction in tourism numbers, which looks like it’s looking to happen, you know.
And if I was to predict 2026, I mean, I think we’ll probably see a stability, maybe a 1% to 2% drop, you know, on 2025. But again, I mean, we’re a long way off there, but like definitely the word price improvements, you know, price reductions, and even buyer-seller being thrown around, which we’ve never, you know, in the past couple of years, we haven’t seen before.
[Ben Pack]
Yeah, yeah. Well, and I think that’s where getting the word out on being able to lend, to be able to finance stuff, there’s different trains of thought. You know, up here in the United States, we’ve actually seen quite a slowing of real estate.
In fact, there’s statistical data, I’m happy to share with you, of inventory piling up in certain states, right? Yep. Where instead of being short, and there’s still a shortfall of housing, but when you take into account higher real estate prices, higher interest rates, and higher inflation, well, that makes it very difficult for these buyers to be able to afford to buy these higher homes at higher rates and higher payments.
So there’s that natural slowing that has happened. But when you look at where the Fed is, and even the CPI report that came out this week, there is tremendous pressure on the Fed to cut rates. And what a lot of people don’t realize is, you know, over in the UK, they just cut their rates this last week by a quarter percent.
Yep. They’re one of about, oh, two, maybe three dozen countries that have been cutting rates this year. Turkey did a 3% rate cut.
There’s the highest I’ve ever seen, by the way. They’re now down to a very affordable 43%. Wow, 43%.
Crazy, crazy numbers. But nonetheless, all of these central banks are seeing the pressure, right? And they’re starting to adjust the rates accordingly.
Now, with the US Federal Reserve, the anticipation, a report just last week had it pegged at 91% probability of a rate cut September 17th. Well, a report today came out saying that is now a 100% certainty. Take that with a grain of salt.
There’s never 100% certainty. But that’s what the report is stating, of a quarter percent rate cut and a 13% probability of a 50 basis point rate cut. So I think people are already baking that into the US rates with the expectation that by December, we would see a second rate cut.
So what does that mean to the housing market in Costa Rica? Well, in the US, the US is our biggest competition from a lending perspective because people tax their equity here. And right now, the average home, because of the rates of appreciation, they’re sitting on, sitting at about a 48% loan to value.
So they have lots of equity in the United States, but they don’t wanna walk away from their sub 4% interest rate that they got.
[Richard Bexon]
I mean, why would you? Why would you?
[Ben Pack]
So in fact, another statistic, sorry, I watched- Hey, I’m a statistics guy, Ben, so don’t worry about it.
[Richard Bexon]
So I love it.
[Ben Pack]
Yeah, so Q1 and Q2, nearly 90% of all the financing that was done was second mortgages. People that were willing to pay a higher seven, eight, nine, 10, 12% on a second mortgage or a home equity line of credit versus giving up their sub 4% rate on their first mortgage. A lot of those folks are accessing the averages about $70,000 of equity.
Now that doesn’t necessarily give them the cash to pay for a house in Costa Rica, but it does give them access to a 25% down payment. So they can finance. And granted, our interest rates are a little bit higher than the US interest rates, but it’s foreign collateral.
And we’re financing 75% on an investment property, a second home or a primary residence.
[Richard Bexon]
Ben, where are you seeing the majority of the loans that you guys are writing? Where is that lending utility? Mainly in Guanacaste, from Tamarindo up to certain areas, like where are you guys seeing the majority of that?
Great question.
[Ben Pack]
When we first started, our first loans were in Los Sueños. And from there, it expanded up into Guanacaste. And that has been where the majority of financing has been done is in Guanacaste, because that’s where the majority of tourism is, right?
However, we’re seeing the trend of a Southern migration. And people are seeing it’s beautiful down there. It’s greener down there.
It’s not as, I hate to say crowded, but it’s not as crowded.
[Richard Bexon]
It’s not as crowded because it’s like, I take it you’re talking like we’ve beat them in a cow or a cow back in the Southern corridor.
[Ben Pack]
Yep, yep. And it’s still close. I mean, it’s not that far of a drive from the airport in San Jose.
[Richard Bexon]
And it’s a 15 minute flight. I mean, I fly to work every, to Mount Wilentonia every Monday and then back every Friday. It’s 15 minutes to Mount Wilentonia.
[Ben Pack]
Yeah, yeah. So it’s really, it’s a great place. And I think the word is getting out more and more.
And I think we are starting to see more applications come in from the Southern zone there. I guess it’s not the Southern zone, but Punta Reyes.
[Richard Bexon]
It is really. I mean, it’s, yeah, I mean, you count the Central Pacific to Mount Wilentonia and then everything South of it there is the Southern zone, I suppose. But it’s not the awesome.
[Ben Pack]
Right, right. So, you know, we’re still seeing tremendous application volume from the Nicoya Peninsula all throughout Guanacaste. But the Central Valley seems to be pretty popular as well right now too.
So, and I think part of that is the heat. I think it’s the overcrowding, but a lot of people I think are trying to get away from that and get closer to nature, enjoying the Southern zone even more. So that’s, those are the trends that we’re seeing.
[Richard Bexon]
You mentioned something there about just the word application and what’s your best advice for anyone that is preparing to apply for a loan, say for a few guys in Costa Rica. You know, they’ve got a property or maybe they think that coming down in the mortgage would be good. A lot of people get mortgages ready basically to hit the ground running.
A lot of people prepare, other people don’t. But the ones that wanna prepare, what would, what do you recommend?
[Ben Pack]
You know, so our process is very streamlined, very tech forward, and it’s very simplified. Anybody who has financed a home up here in the United States, they are going to find our process very familiar. If they go onto the website, they can apply right online, just like they would for a mortgage here in the United States.
We prefer, and this isn’t always the case, we prefer getting people fully approved before they put that offer in. As you know, oftentimes sellers want earnest money to go hard from day one. And so if we can get people income approved, credit approved, we can actually close loans very fast.
The fastest we’ve closed a loan is two weeks, start to finish, because we already had the client pre-approved. All we had to do was get the house inspected, appraised, the research done on the national registry, and the attorneys getting the due diligence done. So it can be very fast.
We typically set people’s expectation of 30 to 45 days to get a loan completed. So that’s what we strive for. If something unique pops up with the property, or some other challenge, or if it’s in a very remote place, sometimes it takes a little bit of extra time to get all the due diligence done and appraisal work done.
But really that 30 to 45 day range is very, very typical.
[Richard Bexon]
Both loans are not for.
[Ben Pack]
Oh, I’m sorry. It broke up.
[Richard Bexon]
Who is it not for? Who is Vola Loans not for? Who should just not, you know, who would you be like, look, it’s just best that you don’t go through, don’t even start.
[Ben Pack]
Well, to be clear, as it sits today, we are only offering financing to US citizens. So anybody outside of that, we are not able to provide financing for. Now I will tell you, and I realize this is coming out pretty quick, we are actively in the process of getting set up and registered to where we can include Canadian citizens in that lending pool that we can offer loans to.
So we’re excited about that. We’ve been telling people, plan on January 1st for Canadians. We are right in the middle of it with a Canadian law firm.
So that’s exciting. We can’t wait to be able to offer that.
[Richard Bexon]
Types of properties, what stuff that you won’t know?
[Ben Pack]
Great question. So we follow Fannie Mae and Freddie Mac guidelines, and that includes the number of units per property or parcel. We can finance up to four units.
So if you have the primary house, a casita, another casita, and even a caretaker’s home, that’s fine. We can do up to four properties on one parcel number. So we finance villas, homes, condos, townhouses, all of that.
We do not finance commercial property.
[Richard Bexon]
Okay. Anywhere in Costa Rica, Ben? Or there’s somebody like, like, no, it needs to be in four areas.
Like I’m not gonna put something in Bala.
[Ben Pack]
Well, interestingly enough, we do not have a restriction geographically. So anywhere in Costa Rica, we will finance homes. The important part is we only finance four units of fully titled properties.
We do not finance concession properties with the exception of Papagayo. We will finance up in Papagayo.
[Richard Bexon]
I mean, there are other loan companies out there in Costa Rica, of course. I mean, what’s the gap that you guys feel that like maybe other people don’t?
[Ben Pack]
Great question. So this question actually comes up quite a bit. The local banks, they’re great.
They have their challenges, right? Oh, I’ve been through it. I think you’re being nice.
And I’ll always speak kindly. When we set out to do this, we saw that there was a lot of hoops and a lot of red tape that people had to go through to get financing. Either that, or they took private financing that was very expensive and had very short terms.
What sets us apart is all of our loan programs have a 30 year amateurization. So a lot longer repayment period with very good rate. It helps properties for those that are looking to invest and have some Airbnb or overnight rental properties.
It cash flows the property very well. Even for somebody that wants to do a midterm rental or a long-term rental, it helps in that monthly cash flow. So 30 year terms, we have no prepayment penalties.
We do not require life insurance with us as the beneficiary. So our costs are low. Our product, we believe is very superior simply because it enables people to buy with less money out of pocket.
It helps sellers to attract more buyers. In fact, as you talk about the pricing and how we’re starting to see some values or sales prices come down, one thing that we offer is seller paid closing costs. It’s been interesting talking to some of the realtors.
It’s not as common. I mean, sure, they’ll negotiate on some of the splitting of fees, but we can actually allow up to 6% of the sales price to be paid on behalf of the borrower by the seller. For them, instead of dropping your price by $20,000, maybe you offer $20,000 in seller paid closing costs.
[Richard Bexon]
Ben, this brings up something that just jumped to me. I mean, we’re talking a lot about the seller. If the seller has something that’s great for you guys, is there any way to be like, okay guys, let me take a quick look at this.
It’s like, I’m giving you everything in a box. I’d love to advertise and be like, look, it already is approved with Volo Loans for X period, 30 years at X percent. Yeah, because usually it’s the other way around, not that way, right?
[Ben Pack]
Yes, yes, exactly. In fact, Emmy Sorenson, she’s our social media marketing director. When we work with real estate agents, builders and developers, she is a free resource.
So as they work with sellers, she’s creating digital content, co-branded content. She’s putting that out and it’s a free resource for the sellers and the seller’s agents. She is there to help market the property, help boost exposure through our social media channels.
And so the thing with sellers, when you get a pre-approval letter from Volo Loans, you can have full confidence that we’ve pulled credit, we’ve reviewed to make sure that the credit is correct. We’ve reviewed the income to make sure that they actually have the ability to repay the loan, that they qualify based off of US standards with Fannie and Freddie. So when you get an offer as a seller and it has a pre-approval letter attached to it, you’re welcome to call and confirm if you want, but know that you can move forward in full confidence that we’ve already verified everything with this buyer.
So your odds of closing the loan is much, much higher.
[Richard Bexon]
That’s interesting, yeah. No, I’m just thinking, because usually I’m the seller, so it’s like, well, what if I was to give you guys everything beforehand that you require from the legal side of the box and go, guys, here it is. I can now advertise that this property also is pre-approved by Verner Loans over X, depending on if you’re subject to approval by you guys from the buyer, but it’s not often you see it that way around, if that makes sense.
Usually it’s from the buyer’s side and not from the seller’s side.
[Ben Pack]
Right, right.
[Richard Bexon]
Very interesting.
[Ben Pack]
Yeah, and we would love to begin working with the sellers right at day one. A lot of the agents that we work with are true professionals. They do such a great job, but we like getting the due diligence done on the property as early on as possible.
There’s an old saying, you can only go as fast as your slowest ship, right? And sometimes that’s gathering documentation on the subject property, on the property itself. And in some cases, it’s the buyer being slow, getting us some of their income documentation.
That’s why we like to engage as early on as possible to make that process as smooth and as quick as possible. Once that purchase agreement is signed, if we’ve done our job right, if we can get to those sellers and buyers early on, they’re gonna have such a better low stress experience because we’ve already done the work. So.
[Richard Bexon]
I mean, you’ve mentioned interest rates a couple of times and I’m sure everyone’s just saying, again, 30 years, which is great. Cause sometimes it’s like five, eight, 10, 30 is a completely different. I mean, it’s very nice to see US style North American loans, but I think it opens the market.
I mean, what are the interest rates you’re looking at? Cause sometimes they’re looking at like 10, 12, 13, 14, 15.
[Ben Pack]
Great, great question. And we see those numbers all the time. In fact, some of the folks that we’re refinancing, we’re getting them out of those really high interest rate loans.
So today’s rate in the United States, we actually just hit a 25 month low on interest rates. Keep in mind that we’re coming down off of the highest interest rates we’ve had since 2005, right? Before the big crash.
We haven’t seen rates this high in over 20 years. So we’re coming down off of that right now for a primary residence, you’re starting at about 6.75% here in the US. But if it is an investment property or a second home, you’re starting at about 7.875 right now with the adjustments. So our rates are higher than they are here in the US, but we’re starting right now at about eight and a half%. So we’re not that high. That’s like a local bank rate.
[Richard Bexon]
That’s a local bank rate here in Costa Rica.
[Ben Pack]
Yep. So we’ve got a couple of different properties. Our most popular properties, excuse me, loan products.
We have a couple of different loan products. Our most popular is actually called a five, six adjustable rate loan. So it has an initial rate that stays the same for the first five years, and then can adjust once every six months after that.
This is tied to the SOFR index, secured overnight funds rate. And keep in mind, we’re coming down off of the absolute highs that we’ve seen in the last 20 years. This is a popular product because it starts with the lowest rate, but there are caps in place, both up and down.
So over time, and when you look forward, we expect rates to continue to improve, right? Well, rates are going to be dropping. This can never drop below four and a half percent.
That’s the lowest it can go to. Where I know the local banks, everything that I have seen in quotes recently, they have a floor of 8%. I suspect they’ll drop that eventually.
[Richard Bexon]
I think we’ve seen some stuff at six and a half or somewhere around there. Usually I’ve never seen anything below 16.
[Ben Pack]
Yeah.
[Richard Bexon]
That’s not an international development bank.
[Ben Pack]
Oh, there you go. There you go. Yeah, for residential, what we’ve seen is right around that 8% is the floor on residential loans.
But they also don’t have caps in place. So as adjustments happen, and if we find ourselves in a market going up, your rate can change overnight, and then the next month overnight again. So where ours, we have the caps in place to protect you that it can’t go up or down more than 1%.
So, but over time, the lowest it could ever be is four and a half percent. That is our most popular loan. So it gives people the flexibility.
They aren’t paying the extra amount for a fixed rate. And it gives them the flexibility, especially in a market where rates will continue to go down to take advantage of those lowering rates.
[Richard Bexon]
Sounds too good to be true. I’m just saying here, like having dealt with some loan processes here with a variety of companies here, private loans, banks, you know, it definitely sounds like the best that’s out there in the market. But again, I’m not, I don’t know the rule of it, but it definitely sounds, as I said, too good to be true.
But I know it’s not, I know it’s true just because I know a variety of people that have used it. But Ben, this has been an absolute great podcast for you. I’m not going to go into too much detail.
My last question for you is, which I love to ask everyone, if you had 500,000 to invest into a business or real estate in Costa Rica, what would you invest it in and where and why?
[Ben Pack]
Great question. So it’s a very simple answer for me. I’m a very active real estate investor myself.
I have Airbnb’s, I have long-term rentals. For me, it would be picking up, I would take that 500,000 and I would leverage that to buy two or three additional properties in desirable areas, including the Southern zone and then the more popular areas as well. And there’s two reasons for that.
Sure, the monthly cashflow with overnight rentals, fantastic, right? But more importantly, taking advantage of the appreciation rates in Costa Rica, even though it’s leveled off right now, it’s not going to stay that way. As stuff opens up, as rates continue to drop and people begin to buy again and some of this geopolitical stuff starts to settle between tariffs, threats of war, et cetera, you’re gonna see that appreciation rate take off.
And so for me, that’s the real long-term value. I’m not a short-term return guy. I’m a long-term return guy.
So I would take that 500,000, I would buy two to three investment properties and I would just let it ride.
[Richard Bexon]
Do you have any areas that you personally like? I mean, you mentioned the Southern Pacific there, but is there any other areas of Costa Rica or would you basically kind of do the research, meet a bunch of people, buy some air DNA data and get an idea of like, how would you go about it?
[Ben Pack]
Well, interestingly enough, I’m actually building a property in Flamingo right now.
[Richard Bexon]
Okay, okay, well.
[Ben Pack]
So I am very active in real estate. So I would do Flamingo. I would absolutely start looking down in South of Domenical and Uvita.
I love that zone. I think it is beautiful down there and it’s less expensive. So I really see stuff trending down that way.
That’s where I would be looking very hard at right now. So, but that’s me.
[Richard Bexon]
Awesome. Well, Ben, it’s been an absolute pleasure having you here on the podcast. I think anyone that wants to basically get the contact details, learn more about Bono Learns, I’ll put all the contact details in the description, but very much appreciate you taking time out of what I know is a very busy day, so to come to my podcast.
[Ben Pack]
Hey, thank you so much. I appreciate it. Okay, have a good one.