Introduction and Market Overview
[Richard Bexon] Good morning, Valeria.
How are you doing?
[Valeria Aguiluz] I’m doing well. How are you?
[Richard Bexon] Good. It’s nice to have someone else from TLA that’s a little bit better looking than Frank.
[Valeria Aguiluz] Oh, I think Frank is fine.
[Richard Bexon] But thank you very much. You’re very welcome. I appreciate you taking the time to join us here.
Well, Valeria, my first question, which I love to ask is, you know, there’s a lot of volatility in world markets. I say Western markets, but I think world markets at the moment. I don’t think I think the normality now is there’s going to be volatility.
You know, I was asked the other day of like, Rich, what do you think the future is going to hold? And I was like, I think the normality is volatility. So people are going to make decisions knowing that there’s going to be volatility.
But how has this recently impacted the transaction volume at TLA?
Costa Rica Real Estate Market Trends
[Valeria Aguiluz] OK, yes, we all have high hopes after the electoral year, which historically brings stability to the market, because one way or the other, like either one side or the other feels at ease. So January, February are usually like high demand months. But this year was different.
This has been a particular year where real estate has had a slow beginning. So most broker real estate agents have told me like the process has really like began until March, May. We have been seeing more volume in the transactions like it is behind on what regular schedule has been.
I believe it’s because of the world political climate. Right. Many people don’t feel sure on where to invest their money.
However, and Frank said this out at our lawyers lunch that we held at the Costa Rica Country Club, since, you know, things are getting a bit more expensive in the United States. This might be a good thing for the Costa Rican or Latin American markets because people can come and invest here. They know they are going to make money out of rentals.
You know how property tax is really low here. We tell our clients whenever they go into these potholes on the street, we’re like, yeah, but remember how little you pay a property tax.
[Richard Bexon] I got to say, though, I love the pothole sometimes because I think it keeps the tourists away. You know, I mean, that’s a terrible thing. You know, I’ve been here for 20 years and I wouldn’t say tourists, but like it keeps certain unadventurous people away from certain adventurous locations, because if the whole country was tarmac, it would be I mean, we’d basically be in Miami or somewhere like that.
And I mean, I think the beauty of Costa Rica is it is a little bit more rough. There are potholes like, you know, our main highways is even potholes on the main highways a lot of the time, you know. So but I think it really keeps it rough and keeps that adventure that people, I think, are looking for in their lives.
[Valeria Aguiluz] I know, I know. We had clients that came here to do this really big development on they wanted to do like a. I don’t know, they had this big tipi and all they wanted to do was like, you know, the blue zone kind of living.
And and they told us this story about how they rented this minivan and it got stuck in a river and they had no signal. But they were not upset. They were like happy about the adventure they experienced.
And that didn’t stop them from investing in a 20 million dollar property. So it’s just a niche market. Right.
For what people are looking for. If you want something more Miami like you would invest in Panama. Yeah.
But if you’re looking like for the raw rainforest beach kind of experience, then Costa Rica is your place.
The Importance of Escrow in Costa Rica
[Richard Bexon] Yeah, I agree. Why? You know, a lot of people, Costa Ricans are not very used to escrow.
I’ve had to you know, I’ve bought a lot of stuff directly from locals here and I have to kind of explain and educate on escrow a lot of the time. You know, in North America, we’re very I mean, or in the Western world, we’re very used to it. But I mean, why do you think it’s so important in real estate transactions in Costa Rica?
[Valeria Aguiluz] Oh, I think it’s fundamental. And in Latin America, Costa Rica is one of the markets that uses escrow the most. If you go to other markets that may have the same potential for escrow, like the Dominican Republic, Panama, El Salvador, they don’t even know what you’re talking about.
But it is vital for I mean, not only for Costa Rica, but for any real estate or corporate transaction to have your money in a trusted place where, you know, there’s a neutral third party that if everything goes sideways, your money will be secure. I mean, you can be the best intentioned developer and then I don’t know, something happens and you cannot continue with your development, the money of your clients is safe. And or if you go through due diligence, you don’t have to fight with your counterpart because there are, you know, there is a contract that states during due diligence process, you can back off this project and get your money as of the, you know, older ways of a cashier’s check or putting the money in the lawyer’s office or the real estate agent.
And let’s be frank, those are not neutral parties. They all have interest in the operation. The lawyer has their interest.
[Richard Bexon] They don’t get paid unless the transaction happens.
[Valeria Aguiluz] Yeah. So I think it’s vital for, you know, peace of mind, neutrality. Also, it depends on the escrow you choose.
You have to be very, very informed of the escrow you choose. For example, in Costa Rica, escrow is not a legal figure, but an adopted legal figure from the common law, right? So SUHEF has done its job about creating this laws, as you know, Article 15.
And there are a lot of small local escrows and there are big companies. But you need to find out a few things like in which bank is your money deposited? Make sure what are their insurances for your money, reputation, projects they have under their care.
For me, it’s very easy to promote TLA because we work with a tier one bank because we have strong insurance against errors and omissions in the United States. Because it’s natural environment for escrow. In Costa Rica, there is not a natural environment for escrow.
For example, other people who have left the escrow business have told me I cannot compete with you because for me to have the insurance you have elevates the costs to a place where I cannot compete. So you need to really do your research. Who works with TLA?
We don’t take sketchy clients. We do our homework. So I think that is the reason you need to use escrow and you need to do your homework when you choose the escrow you are going to use.
How US-Based Escrow Services Work
[Richard Bexon] Well, look, I mean, I love using TLA because you guys are in the States, meaning that, you know, it’s just a lot easier for the client to open escrow. I mean, here in Costa Rica, the paperwork just required to receive money is ridiculous. And I think anyone that’s been through it understands that.
Also, as you’re doing U.S. banks, so it’s very instant with regards to transfers. Again, if the money needs to come to Costa Rica, yes, a little bit more paperwork is required, of course, but then you do it on the back end and not on the front end, meaning that when you open escrow in Costa Rica, you do it on the front end. You know, and it just can be very frustrating for clients to do it.
But I mean, how does escrow work in the U.S., if you don’t mind me asking? Like, you know, I mean, I don’t know any other escrow companies in the U.S., to be honest with you, apart from you guys. I mean, I think if the buyer and the seller are outside of Costa Rica, it’s like don’t bring the money.
There’s no need for the money to come in and out of Costa Rica if you don’t want it. Like keep it in the U.S. and you can do the transaction. You know, it can be written here.
Like, there’s no point, you know, complicating it, sending it to Costa Rica and sending it back up. And like, you’re just going to create frustration. But I mean, how does escrow work in the U.S.? I mean, you mentioned tier one bank account, errors and omissions. I mean, do they have a SUHEF over there that regulates escrow?
Regulatory Framework and Compliance
[Valeria Aguiluz] Yeah. For example, escrow normally in the U.S., in the U.S. for U.S. transactions is normally tied to title. All title companies like Stuart Title offer escrow because it’s a very leveraged market.
Everybody works with a mortgage, right? But Latin America, Costa Rica, it’s a very cash market. Like people pay upfront the whole amount.
Like they pay, they give you like the, you know, the down payment and then they do the following payments in cash. So there’s no mortgage. And as you know, no title insurance needed here in Costa Rica.
Once upon a time, it was tried by some companies like Stuart Title and Chicago Title. But we have one of the good things we have in Costa Rica is the National Registry. But OK, how does it work in the United States?
We are licensed by the Banking Department of Texas. So we are audited a lot. Like we have to do our homework on who is our client, you know, all the anti-money laundering policies and such.
So what we ask is a form called Know Your Customer, as you know, ID. But in the U.S., you have a much stronger service or platforms where you can see everything about a person. And we run what we call the Patriot Act that goes to FBI, CIA, all of these entities.
So it’s really fast and easy to do a background check to make sure we are not dealing with, you know, some person of doubtful reputation. So it’s easier when we have a U.S. to U.S. transaction, because all you need is KYC, escrow agreement and a copy of the passport. However, more and more, some money comes to Costa Rica for the Real Estate Agents Commission, for the fees to register the property and legal fees.
So we do have to do proof of funds and comply with SUHEF. And this is very important. TLA complies with SUHEF.
TLA asks for the origin of funds. In Costa Rica, they ask for the origin of the origin. Before, it was a little bit more, a little bit easier, like bank statements, tax, tax filings.
But now it’s like, no. Where did the money, what economic activity produced the money you have in your bank account? So that’s SUHEF.
So we do all of that origin of funds due diligence when money is coming to Costa Rica. And frankly, some part of the money is always coming to Costa Rica. A very useful document is the CPA, you know, from a public accountant that really helps banks to receive the money.
And this might be a controversial opinion, but I’m not mad at SUHEF because I want all the bad guys to stay away from my country.
[Richard Bexon] I agree. I’m with you. I mean, I’m glad, again, I’m glad people make things difficult.
And the reason being is if you want to make easy money, this is not the country to do it.
[Valeria Aguiluz] No, no, no. We have had calls where Frank has been very blunt about, we are not here to help anybody loan their money, like openly. Like we are a legit company with the interest of dealing with serious and reputable people.
[Richard Bexon] Yeah, no, I can definitely see that. Again, I’ve had a lot of interaction with you guys. Also Frank as well and everyone in your office and always very professional.
And you guys do a great job. Thank you. What are the countries beyond Costa Rica that you started to see grow, Valeria?
Emerging Latin American Markets
Because again, you know, this podcast is usually about Costa Rica, but you guys have such a visibility into Latin America. I mean, are there any other countries that you’ve just been like, like that are really developing at the moment?
Panama: The Latino Miami
[Valeria Aguiluz] Panama. Panama is a hot market right now.
[Richard Bexon] Yeah.
[Valeria Aguiluz] And it has, for me, it has three reasons to be so hot. One, it’s like a Latino Miami.
[Richard Bexon] It is.
[Valeria Aguiluz] And there’s a lot of people who really like that. I like it from time to time. I like to go to Panama.
[Richard Bexon] It’s Latino Miami. I mean, like, I like Miami. Well, I mean, Miami is kind of very Latino though.
Right. But, but yeah, I mean, it’s, it’s, yeah, it’s, it’s very similar.
[Valeria Aguiluz] And then it’s also gorgeous. They have, they have to protect a large part of their country to keep the water flowing into the canal. So it’s really beautiful.
And it is still raw. And there are many developments coming into beautiful beaches. And people are starting to discover this well-kept secret because your typical investor in Panama would be like the wealthy families of Colombia, Venezuela, Panama.
But now we, we are getting more foreign investment, like from the US, especially Canada as well. Then the Dominican Republic is like, you know, I think it’s years ahead from when Costa Rica is right now because their economy is stronger. And because they have, you know, the screensaver beaches, like the white sand paradise, you know, and, and that, and that really calls in for a lot of people.
Dominican Republic and El Salvador
It’s beautiful. They have Punta Cana. They have Casa de Campo.
They have Aman. They have a discovery land. They have a lot of, a lot of ultra luxury places.
And people are kind. They really protect the tourists. It’s not a dangerous country.
You have Haiti, but that’s like not a problem right now. It’s like we have Nicaragua, sadly. But in both countries, what, what happens is that people from these less favored countries come to work and are mostly honest, good people.
[Richard Bexon] Yeah.
[Valeria Aguiluz] So I would say Dominican Republic and Panama and a country that is really getting investment is El Salvador.
[Richard Bexon] I knew you were going to say El Salvador.
[Valeria Aguiluz] Yeah. Yeah. Because it became safe.
Many Salvadorians who have left for the United States are like, I can invest in my own country. And I think that’s so beautiful.
[Richard Bexon] Yeah. Well, I mean, I’ve been to El Salvador, you know, I mean, I think it was pre Bukaleli. You know, I got invited by the tourism minister there and we flew, but we flew everywhere in Hueys with like military, you know, escorts.
[Valeria Aguiluz] It’s tiny.
[Richard Bexon] Yeah.
[Valeria Aguiluz] If you think Costa Rica is small, it’s El Salvador is tiny.
[Richard Bexon] I got sick on papusas. I probably shouldn’t have eaten so many, but, you know, but yeah, I hiked volcanoes and it was, yeah, it was, it was spectacular. It’s a beautiful country.
[Valeria Aguiluz] It’s spectacular. There are some developments in Belize, but you know how Belize is part of Central America, but somehow not.
[Richard Bexon] Yep. That’s probably, that’s the Brits, unfortunately, so yeah. So there’s development in Belize.
Yeah. I think it was British Honduras years back before it was called Belize. It was called British Honduras.
I think my father did his jungle training for the military in Belize, but yeah, many, many years.
[Valeria Aguiluz] Oh, really?
[Richard Bexon] Yeah. But it was like 30, 40 years ago.
[Valeria Aguiluz] My father lived in Belize for a time of his life too, for training too. And for my father, he, he was like, I am grateful because I learned English at a very young age. He was like 18.
But for my uncle, he called it the hell of Central America.
[Richard Bexon] Look, I mean, I think there’s two sides to everything. It just depends how you, how you kind of look at stuff, but well, Valeria, I mean, this has been great chatting with you. My last question for you though, I mean, if you inherited $500,000 and you had to invest it into a business or real estate in Costa Rica, what would you invest it in and where would you invest it and why?
Personal Investment Preferences: Nosara
[Valeria Aguiluz] I would invest in Guiones in Nosara. It’s my favorite place in Costa Rica. The community is, is a melting pot of really interesting people who are fitness oriented.
It’s well mapped, that side of town, like Guiones. And it just fills my soul, really.
[Richard Bexon] But I mean, what would you buy? What would you buy? I mean, it’s an investment.
So you need to buy an investment.
[Valeria Aguiluz] It’s an investment. I would buy, I would buy into a gated community so I can, you know, rent it when I’m not using it so I can make a return of investment. And yeah, that’s what I would do because it’s not a lot of money.
[Richard Bexon] Yeah, true. And $500,000 doesn’t go that far in Costa Rica, unfortunately.
[Valeria Aguiluz] Yeah.
[Richard Bexon] No. Anyway. Well, Valeria, it’s been an absolute pleasure having you here on the podcast.
I love your viewpoint. At some point, we’ll get you back on as well. I’d love to discuss kind of gentrification.
I know that we had a conversation before that. I know that you’re invested in. Yes.
You know, you do some journalism work, so it’d be great to have that discussion as well. And yeah, because I’ve got one podcast coming up on Pavones, you know, with Walter Brenes, who’s an environmental lawyer, who’s kind of, you know, I would say fighting down there for some of the locals. So it’d be good to kind of see the counter side to that, you know, up in Guanacaste.
But very much appreciate your time, Valeria. If anyone wants to get in contact with Valeria or TLA, I’ll put all the contact details in the description. But very much appreciate your time.
[Valeria Aguiluz] Thank you so much. Thank you so much.
[Richard Bexon] Have a great day.
[Valeria Aguiluz] You too.
[Richard Bexon] Bye.
