Introduction
Hey guys, so yeah, what did I learn? Well, I mean, I suppose the first question, you know, I always ask in the podcast is kind of what’s happening in the market. So I’ll give you a bit of an update there. You know, we’re in a very quiet time of the year, September, you know, August, September and October is our quietest months of tourism here in Costa Rica. So you’re seeing a lot of price adjustments, again, the word fire sale throwing around price improvements. So I think this year is going to be very interesting and also the start of next year as well. I think again, you know, we predicted back in last year that we’d see a reduction of anywhere from like five to 8% in arrivals, which we are. And I think the following year as well, we’ll probably be pretty flat. I don’t think we’ll see that much of a reduction, but I think it’s going to be flat guys. And I think that we’ll probably also see that we’ll still continue to see price improvements, price improvements in some locations in Costa Rica guys. But still a lot of opportunity out there. If you know what it is that you’re doing and you look at the data, which of course that we do, you know, we look at tourism data, hotel data and then also vacation rental data and kind of put that together with real estate data just to really find the opportunities out there.
Manuel Antonio Villa Development Overview
But anyway, but yeah, today I just want to kind of just chat about development here. You know, we’ve just delivered three out of six villas in Manuel Antonio. I’m certainly not greyer if you can see my hair here guys, if anyone’s watching it on YouTube, if not anyone listening, I’m greyer. You know, I think I’ve wanted to physically harm a few construction workers in the process. It stressed me out quite a bit, but you know, it’s that, that I would say those final small details. So one thing that I learned guys was I actually put together a finishes crew. I bought people that I knew from other projects and kind of put them together in a finishes crew that I was able to get what I call the hammer swingers out, the finishes crew in. And then after that kind of more the operational kind of cleaning stuff there. So it was kind of like a three facet kind of movement there from getting the construction guys out so that the final touch up guys could come in because that’s kind of the devils in the details for me. And it’s never done. I mean, I’ve got a list, I think we, you know, have 150 points here of stuff that needs to be done in each villa. So yeah, but you know, I’m a pain in the butt and that, but that’s also why people hire us as well, cause we’re a pain in the butt.
Costa Rica Construction Timeline and Weather Delays
But you know, I’d probably say the process in general took 25% longer than we expected, which is actually not bad for Costa Rica. You know, one of the big things for us was the weather delays. If anyone remembers October, November last year, it was the wettest on record. And we were actually digging foundations there. So it was interesting opening up and it would fill up and make a pool and then try and basically wait for a bit of a delay, get the water out in order to pull the foundation. So that kind of pushed us back. I would say at least 30 days, also the municipal municipalities understanding of our project as well.
Manuel Antonio Municipal Approval Process
The land was a little unique because it had view easements. So the gentleman that I bought it from who was an eco warrior, Jim DeMarlis, who unfortunately is no longer with us, had actually very smartly put view easements so that you couldn’t build towers because he really did not want towers in Manuel Antonio. So we had to kind of get that document from the national registry here and sit down with the municipal engineer and kind of explain everything to them. And if you can believe it, Manuel Antonio has one municipal engineer for the whole thing and she’s absolutely overwhelmed and sometimes doesn’t, I would say, have the brain space to sit down with the details. So we had to sit down with her probably two or three times. We’re even sitting down with her on Villa 5 and 6 at the moment, kind of explaining everything to her.
Costa Rica Construction Company Management
And then also just the construction company was not as organized as we are. I’m yet to find a construction company that is as organized as we are and really that’s organized. So I think once we started to put pressure, you kind of start to see where I would say the strengths and weaknesses of businesses are. And we ended up basically having to kind of organize the project a little bit more, but I mean, that’s what we do. We’re project managers. So I’m creating kind of milestones and delivery times. And then also then talking with the individual people like the metal work people, the electromechanical basically guys, and just making sure that they were aware of what the delivery dates were. So, yeah.
Costa Rica Development Pre-Construction Costs
I think also of just understanding that the non-construction cost guys are high as well, even before you like start building, architectural costs, just so you’re aware guys, I mean, a good architect in Costa Rica to build something decent, it’s going to be anywhere from like 30 to $50,000. That includes all your construction documents, design, et cetera. And then also is that during the construction process, the architect, the structural and electromechanical guys need to come in and do inspections, which are anywhere from 750 to a thousand dollars a pop. And they’re probably doing anywhere from six to nine of those inspections throughout the whole project. So, I mean, $6,000 say over three different guys is $18,000 just in inspections. Because remember here in Costa Rica, the municipality doesn’t inspect, it’s actually on the individual professionals. So they they’re responsible for the work.
Manuel Antonio Infrastructure Development Costs
Also just infrastructure cost guys as well, building the entrance, the roads and water management here in Costa Rica is so important as well. Because when it rains, it rains. So I didn’t, I had budgeted, I think probably around, I think we budgeted around $60,000 in infrastructure and it ended up being double that at $120,000. A lot of that was me just because again, I’m a perfectionist. So just making sure that we had nice gutters, we’ve got a nice entrance, nice gate, those kind of things. And I think initial, I would say, you know, initial, you know, when someone arrives and the appearance is beautiful, people are a little less scared. But when you arrive at a property and it doesn’t look great, you know, I mean, they sometimes people are like, what have I just paid for? So, you know, we try and make sure that we, our initial appearance is very, very good.
Costa Rica Land Development Budget Considerations
But yeah, just, you know, I mean that doubling of basically infrastructure costs there on roads, water management and entrance is not something that someone thinks about. And I talk to a lot of investors, you know, and I always say like, look, if you’ve paid $100,000 for your piece of land, you may end up spending $100,000 in infrastructure. And I say infrastructure, fencing, entrance, roads, gates, those kinds of things and water management. So just bear that in mind when you are budgeting, excuse me, a project here in Costa Rica. You know, there was a point where I actually had to go back to a few investors and ask for a little bit more money. It wasn’t that much more. But just again, just the weather kind of came back and increased some of the build costs there. Again, two months of extra man labor, we were just kind of sat there, we had to pay for that.
Manuel Antonio Jungle Villa Landscaping
And then also just landscaping costs as well. Just the initial landscaping costs kind of went a bit over budget because I needed it to look more jungly. So, you know, it’s not like when I cast there where you can kind of just lay grass or stones, etc. You know, these are treehouse villas in the jungle. So, you know, and the construction guys don’t care. So they’ve just literally it was just destroyed everything. It was like leaf cut around to come in and, you know, just taken everything. So I had to kind of re-put the jungle back in and hire a professional landscaper to do that as well. So that was an interesting cost as well.
Costa Rica Electrical Infrastructure Development
And then one thing I did not foresee, we had electrical availability letters from the municipal, well from the electrical company. And we had to put the electric infrastructure in place. And that ended up costing, I think about $30,000 for that because we had to put the post in, we had to buy the transformer, etc. So I would always say, you know, expect to buy a transformer that can go anywhere from like $2,000 to $4,000. You just have to remember here guys is that these electrical companies are not making tons of money. A lot of them are all government run as well. So when it comes, it’s like, if you’ve ever listened to some of the podcasts, it’s like the Asadas, the water management, where water is somewhat cheap here and that private individuals basically are putting in the infrastructure. And it’s very similar with the electrical infrastructure there. So yeah, we’re working on that and just tons of bureaucracy guys. I think anytime you touch a government institution, it becomes bureaucracy and just really everything in Costa Rica is bureaucracy. So you just need to know the right people in certain areas and thank God that we did. So that kind of thing, you know, kind of moved very, very quickly.
Manuel Antonio Construction Material Management
The bill itself went very good. You know, I mean, the one thing I will say is if we hadn’t had ourselves on it, all the project managers, there would have been delays of just making sure that like, you know, finishes were chosen that like everything from light switches to plug sockets, to the ceramic on the floor, to faucets, etc. Just making sure that we had all this way before. And we actually had a container on site and had it all stored inside a container just so that there was no excuse for any delays. But I’ve seen other projects where we weren’t on it, where there have been, you know, I mean, those delays kind of add up a day here, two days there over multiple different finishes. And you can sometimes end up with a 30-day delay there, guys. You know, and I mean, who pays for that 30-day delay? You do. If it’s an administration contract and not a key in hand contract. So important to just make sure that all materials are on site. And that’s one thing we’ve actually been doing with our future villas of just actually buying all materials. So all of the steel for the structure is there on site. You know, all of the ceramic is already there on site. And, you know, you know, I think we’re laying floor, you know, level two at the moment. So still a long way to go. But we’ll see how that one goes.
Manuel Antonio Villa Marketing and Pre-Sales Success
I think some of the successes, guys, because of what we had, you know, we invested in very high-end renders. We paid thousands of dollars for high-end renders. And it looks exactly like the renders. A lot of people who actually booked on the renders arrived and went, wow, this looks exactly the same, if not even better than the renders. So, you know, that was a big thing for us. Again, our projects are a little bit more commercial sometimes. But if you do intend on renting, I would suggest renders. You can pre-sell. I mean, we pre-sold $300,000 of reservations even before opening the door. But again, that’s kind of our special source just because of my knowledge and network here in Costa Rica, as many of you know. It’s kind of, you know, interesting because people are like, Rich, how are you able to do this? And I might put in 20 years of work in order to be able to, you know, rocket source these projects once they, you know, even before that they’ve started. So, yeah, that’s kind of what makes us unique and very different is we don’t rely on Airbnb, VRBO, or any of that, you know, stuff, which typical property managers do. You know, we have great connections within the luxury travel network, not just here in Costa Rica, but also, you know, internationally as well. So that helped us.
Costa Rica Development Lessons Learned
You know, what would I do differently if I had to go back and do it again? Well, I am doing it differently because I’ve still got three more to build. You know, I’m going to have my own engineer on site a hundred percent of the time. You know, we had the construction company’s engineer and he was okay. Don’t get me wrong, but, you know, I mean, he worked for the construction company, not for me. So I’m actually shedding out the, making the investment for our own engineer to be there on site to look out for our own interests. You know, so we have, I would say less slippage, you know, and things being broken, et cetera, and just making sure it’s a much more efficient build from our side as well. And also just taking a little bit closer look on the expenses and also the trajectory, really planning out the trajectory of cash flow throughout the project as well. We were fine with cash. It’s just making sure that, you know, I was managing my expectations of what the money requests were going to be at certain periods of time and also auditing some of those requests as well. You know, which is something that we do in project management. So, yeah, I think that would be a definitely a big thing.
Manuel Antonio Project Management Improvements
You know, I was on site every single week taking a look at things. You know, I think if I had to go back and do it again, probably a lot clearer timeline with deliverables. One thing we’ve actually started to do with some of the subcontracting guys is actually put penalties in their contracts as well. So where we actually had the contract, the construction company, the construction company had contract with the suppliers and, you know, third-party contractors. Now I’m just doing the contract directly with a third-party contractors myself and also making sure that they have delivery dates, bonuses if they finish early because I do believe in people, you know, being bonused if they finish early and also again penalties if they’re late here as well. And just meeting constantly guys. You know, I think anyone that works with projects and us know that there’s a recurring weekly meeting that sometimes we meet and sometimes we don’t but it’s having the discipline to have that meeting every single week. Again, even if it’s just to get in and go, guys, how are we doing on the timeline? Yes, everything looks good, great, and then leaving it. It’s just that discipline and that mental space that we have that recurring meeting every single week. So I think a lot more detailed milestone plan with deliverables and who was on it and then just talking to the individuals that are responsible and not talking so much to the construction company. So talking with the, you know, the I’d say electromechanical company of making sure that they’re clear of what their deliverable is for this week and also is for this month as well, etc. So I suppose just being a little bit more anal on the project. And again, I think it just goes back to having my own engineer on site, you know, rather than, you know, us visiting once or twice a week, but actually having someone there Monday to Friday living on site and breathing the project and being responsible or as we used to like to say the throat to choke.
Manuel Antonio Development Financial Results
But, you know, and I’m sure there’s a lot of other stuff here, guys, as well. You know, we were able to get great rates on ceramic, amazing ceramic for like $20 a square meter instead of, you know, $50 a square meter, which we had in our budget. You know, and while delivering some of these villas, you know, we’ve been able to find some improvements, which we’re applying to villa four, five and six. And again, anyone that’s interested in investing in this, it’s very interesting, just because again, you get an annual dividend, you get ownership. And also when we sell the property in a couple of years as well, you know, we get to basically you get that exit there. And to give you an idea, I mean, I think we spent the first villa, the first one we raised 700,000 and we just sold for the two for nearly a million dollars. So there’s, you know, a $300,000 difference there. It will take, you know, over a period of like two years there. So the investors are very, very happy and we haven’t even started renting. I mean, I think we just had our first guest last week there. So it’s very interesting on that front, guys. So if anyone’s interested on investing, you can email us info at investing costa rica.com or all of the contact details are in the description down below.
Conclusion
But anyway, guys, I’m not going to use my, like cut to the actual end of the podcast here. We can just kind of end it now. But if you are enjoying the podcast, please subscribe, give us thumbs up five stars. If anyone wants to chat with me as well, guys, you can do again, just email us info at investing costa rica.com. I’m busy, but I always make time for people. It might be a week or two in the future, but I’m happy to just kind of share my experience, my knowledge with everyone. I’m a sucker for helping people, as many of you know but appreciate you listening to the podcast and hope you have a great week.
