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158 How to make your investment a success in Costa Rica

158  How to make your investment a success in Costa Rica
158  How to make your investment a success in Costa Rica

Podcast Transcription

[Richard Bexon]
Good morning, Barry. How you doing?

[Bary Roberts]
Hey, Richard.

[Richard Bexon]
Good to be with you again and to have some time to spend together and see what's happening in the world, particularly in relationship to real estate and tourism in Costa Rica. So it's great to be here.

[Bary Roberts]
No, it's a it's an absolute pleasure to have you back on the podcast. I know the listeners really enjoyed last time you were on it. And I think you give a different viewpoint than a lot of the people that we speak to just because I think that you kind of you straddle that world between, I suppose, the private and public sector.

[Richard Bexon]
Well, yeah, the many years of experience have thrown me in both sides. I've learned to play with a curveballs.

[Bary Roberts]
You know how to fight in the street and fight in the ring.

[Richard Bexon]
Yeah, that's right. You got to do that to survive, my friend, particularly in this country.

[Bary Roberts]
Was that Rocky IV or Rocky V? I can't remember which one it was, to be honest with you. But yeah, Barry's done all the Rockies.

Well, let's get straight into it, Barry. I mean, with world economies kind of, you know, somewhat schooled. I mean, what have you seen happening here in Costa Rica?

[Richard Bexon]
Well, definitely the world economy has an effect. I mean, tourism for us, and I'm speaking from the tourism perspective, as that's my main area of expertise. And we have over 85 percent of our business is international.

So the world economy has a definite effect on our business and particularly the effect that the economy has in the US, Canada, which are our main partners. You know, basically, US, we have almost 70 percent of our business comes from the US right now. It was less pre-pandemic, but it's more now that pandemic has been passed.

And so what happens there has a lot to do with this. When there's less discretion of spending funds in the states, then we see our tourism affected. So in effect, it is it is affecting us.

And it's also affecting us from the perspective of our own economic structures within the country. So the cost of our producing products and services has increased and is in a very serious situation because the dollar exchange rate has changed a lot. And we've lost a lot of income because the dollar has lost a lot of weight next to the colón due to some of the political decisions of this government.

So in general, the situation is tough. It's very it's very complex and it's more complex now, Richard, because we have a government that does not really believe in a full reality. They only believe in a partial reality.

They believe in the reality that suits them and what they can work with. And so they present things in a way that are that are really very interesting. And you can't say they're lying because they have data with which to back it up.

But, for example, they speak about the inflation and they talk about the inflation, but there's various types of inflation. And, yes, the macro inflation for the country has diminished and that's good in certain degrees. But that has not diminished the cost of going to the supermarket.

That's continued to increase. It doesn't it doesn't diminish the cost of living that continues to increase. So those are things that that are very different because our reality is not in the macroeconomics.

Our reality is in the day to day and in providing the services that we need for our clients.

[Bary Roberts]
Sure. Sure. I mean, you mentioned just a couple of a couple of things that jump out there.

I mean, if I'm correct, though, I mean, January, February, March, April. I'm not too sure how May and June are because I haven't looked at the numbers. I mean, we have record arrivals for tourism, right?

[Richard Bexon]
Well, let's say record in the sense that from certain perspectives, but that's see, that's part of the problem. They said, OK, have more. We have one percent more tourism.

All right. It's not one percent more tourism. We're still 14 percent down.

The problem is we have more air arrivals than we had in 2019. You see, you have more people coming in by plane. But then, for example, they don't take into account the great amount of people that come to the Liberia Airport in northern Guanacaste and just get off the plane, get on buses and go to Nicaragua.

And they don't take into account all these other things that made a big difference. So in reality, there's there's a lot of questioning in terms of what you're doing with business. The reality is we did have a very good high season and it would have been very, very good had they not locked our income down by 25 percent due to the exchange rate.

Because we establish our rates at least a year in advance, if not more, in dollars internationally. And so now that the dollar is worth 25 percent less, but all my costs are in colones. See, the local currency is what manages my costs.

So I've actually lost 25 percent of income. Now, which companies have so much profit that they can lose 25 percent income and still make money? Particularly when you look at the fact that 90 percent of the companies in Costa Rica are very small companies, mom and pop operations, less than 10 people, et cetera, et cetera.

So this is something that is very, very serious and has affected us very, very hard.

[Bary Roberts]
Yeah, I mean, we've certainly seen it in construction, Barry, as well. You know, recently we had the value added tax here jump from 8 to 13 percent on. Well, it jumps on the 1st of September here for all construction here.

So we've seen that, but also that 25 percent, as you've seen, kind of weakening of the dollar against the colon. I'm not too sure if one gets stronger and one got weaker. I can never work which one.

[Richard Bexon]
The colone got stronger and the dollar got weaker, but it's not responding to the international situation. It's responding to local decisions, local politics.

[Bary Roberts]
You know, so I mean, the cost of construction has gone up. So in some extent, you know, when we look at projects now, it sometimes makes sense to build and sometimes does not. Because, you know, with the price of homes that were built in dollars the previous year when they were started, they were able to take advantage of that.

You know, that strength that the dollar had against the colon, but new projects that are coming on board now, you know, the cost to build, you know, maybe didn't go 25 percent, but it definitely increased, you know, 15 to 20 percent on the bill.

[Richard Bexon]
So that affects the business. You can't bring in that size. Those differences make too much, too much difference on your bottom line and you're at that to be able to make it, you know, make it with that.

And so that's part of our problem, especially if you're talking with small companies.

[Bary Roberts]
Yeah.

[Richard Bexon]
You know, it's much harder. The real problem is what they've done is they've killed our liquidity. Maybe we have assets, but we don't have liquidity.

But you can't you can't pay salaries off of assets. Correct. And you can't pay for food off of assets.

So that's part of our problem. Yeah.

[Bary Roberts]
Well, I mean, how would you compare how would you compare 2023 so this year to compare to 2022 for tourism in Costa Rica?

[Richard Bexon]
Well, it's been a it's that's an interesting question, because from a standpoint of purely statistics of arrivals, it's been better from a standpoint of income and being able to generate any kind of a profit, if at all possible. It's been very limited. And you have to remember that we're just coming out of the worst period in tourism history in which we had zero income.

So our our debt structure, which continued to accrue interest and penalties during the period we didn't pay, gave us a much bigger debt structure now that we're recuperating than what we had before the pandemic. So it's a very serious problem. And I'm seeing a lot of companies that have plans to to remodel, to to expand, to increase personnel, et cetera, have all cut back.

There's less expansion, less renewing, less less employee contracting people out. I mean, yes, we are. We're in the low season and the low season.

You always get rid of some employees, but not to the degree that it's happening right now. We're getting a lot, a lot more cutbacks in employees in tourism than we've had in previous years, percentage wise.

[Bary Roberts]
And are you seeing a return to seasonality this year compared to, you know, 2022 was kind of somewhat like a flatline, a great flatline, if that made sense. Whereas have you seen a return to seasonality kind of a little bit more this year of that post Easter, you know, May being a bit of a lull, June and July starts to pick up.

[Richard Bexon]
Actually, you're right. It has it has come back. The seasonality is now starting to show up.

I mean, we talk with all our clients all around the country and they tell us that they're seeing a decrease in in the amount of reservations than in the percentage that was going up previously. And so we do see and we do foresee that it's going to be a lot lower. This second semester is going to be a lot lower than anticipated and proportionate to what happened in 22.

It's not going to maintain the same level of growth and stability that 22 had. Although it was it was at a lower at a lower base. I agree.

But what the base we have now is not going to hold up. It's going to drop because of the lower season.

[Bary Roberts]
Yeah, I mean, I think anyone that's into tourism or anyone that's going to get into tourism just needs to understand here of like, it's like skating on ice and sometimes it's thin and sometimes it's not. You just can't sometimes see when it's thin. You know, there's just a lot of variables out there that you don't control like again exchange rates, you know, because no foreigner wants to pay in Costa Rican colones, it's confusing to them.

You know, if they have to pay, you know, 250,000 colones a night, they're like, I don't understand what that is. Whereas if they say it's $500 a night, they're like, okay, I completely understand that you see. So, I think they're going to continue.

[Richard Bexon]
350 they were paying last year. Yeah, yeah, true. Yeah.

And you have to add another thing to that, Richard, which is very important to point out is first of all the cost of living in Costa Rica is 20% on an average higher than the whole average of Latin America. But that has not been a reason for not having good tourism because we've been able to get good quality experience and that's great. However, the competition has not stayed put, and the competition has devalued their money relative to the dollar in Colombia and in Republica Dominicana, which are two main competitions for the North American market.

And so they're competing at a 40% difference, you know, they're really way up there in terms and we're suffering from it. That's part of what's, that's why we're having a downturn in the reservation increase.

[Bary Roberts]
Yeah. Well, how do you think 2024 is going to shake out?

[Richard Bexon]
You know, it's very difficult for another reason. I mean, it's very difficult because security has become a tremendously highly potential tsunami coming around the corner. The things that are happening, you know, what happened to the Canadian yesterday, things like that are things that are creating a very serious doubt.

I mean, the US State Department has not only raised us to level two from level one to level two in security and level three is don't travel. They put out warnings on top of that. So we're in a very, very delicate situation, and we're not, we don't have the handle on it, we're not getting it together.

And so we're having all kinds of delinquency and things like that and people are just, you know, going crazy. So this is something that, if you add to that, the image that the president is generating by all of a sudden authorizing the fishing, the arrastre, I don't know how you say that in English, but the nets that drag along the ground on the floor of the ocean, which are totally anti-conservation and totally anti-biodiversity, etc. I mean, they're criminal in that sense.

And they're also now talking about authorizing petroleum exploration and natural gas exploration. And they are establishing the amount of the capacity for a park, depending on what its sewerage can take. I mean, things like that are so ridiculous.

And they're giving us such a bad name internationally. We're losing the positioning that we had. And in Costa Rica, the two main attractions, nature and Pura Vida, well, we're losing both of them because cost of living and the loss of jobs and the insatisfaction of people is changing attitudes.

And at the same time, you know, we're having a lot more division being made in Costa Rica. There's a lot more class division. The poor are getting poorer and the rich are getting richer.

And that's totally contrary to what the government is preaching, but that's what the reality is.

[Bary Roberts]
Barry, it sounds like you and I will be going on a crusade to sue the government again and the president. Well, we did it once and won.

[Richard Bexon]
And I think we're about to have to consider that kind of actions in the future because the irresponsibility with which they're making certain determinations are really affecting us very, very seriously. And I think that, I mean, I was looking at a document that was passed to me today. There's been 21 reversals by the Supreme Court on decisions that the government has made.

They've had 14 accusations put against them. They've had 36 ministers or vice ministers resign or thrown out in 14 months, 15 months. And this is ridiculous.

It's improvisation at the worst, you know. And so these are things that we have to worry about very much. But, I mean, Costa Rica is a blessed country and we've survived everything up till now.

And I'm asking God that we survive this one as well. We've got two and a half more years to survive.

[Bary Roberts]
I think the beauty of this country, though, is, Barry, is that the Supreme Court, you know, stops things from happening here. Individuals, groups of individuals can get together and they can push back and sue the governments. Like, if you were to do that in the UK or the US, you've got to be ready to be audited for the next 10 to 20 years.

Like, people are scared of government. Here, we don't seem to have that relationship so much with government.

[Richard Bexon]
Well, we're not scared of the judicial system, but business people are scared of the executive because we have seen a lot of false accusations, persecutions, insults, defamation, etc. coming from the executive branch of the government against business people. And this is something that is very, very tragic and very, very negative.

I mean, the amount of hatred and division and the rest that's being planted is just unacceptable, to be real frank with you.

[Bary Roberts]
Well, why is tourism not at the forefront of the government's radar in Costa Rica? I mean, I don't, there hasn't, since I've been here, I'm trying to think of a government that's really pushed it and it's been at the front of everything. You know, it's been really of their number one, you know, charge.

[Richard Bexon]
You were not here in 94 through 98. No, I wasn't. That government was Jose Maria Figueres and he did, he made an agreement with the private sector and we made a joint thing between the Ministry of Tourism and the National Tourism Chamber and we organized nine areas of work.

And we had the ministers responsible for each area to meet with a private sector representatives of each one of those areas. And we met every month with the president in the presidential house in order to see the follow up of what was going on. And that's when we started sustainability.

That's when we started the whole thing about CST, the no artificial ingredients, the whole process. That's where we position Costa Rica. And that's where we got.

Since then, we have not had a government that's done that. But part of the reason is after that, during that time, there was a lot less of us in the activity. So we knew each other.

We work together a lot easier. From that period forward, there's thousands and thousands of small companies that have shown up, which is great because that's the best product Costa Rica has are all these small mom and pops, you know, the Pura Vida type situation. But then what happens is they don't have the organizational skills.

Or the finances to get together and have like a Camara Nacional de Turismo that really represents and has the authority to come and confront the government and tell them, you know, they need to fix this or that, like the Camara Industrias or or the coffee makers or the, you know, cattle people, etc. So the real problem is most people do not understand that tourism is a strategic activity for recuperating the company and for generating jobs, but that it is intermingled with all the other activities. So they don't realize that when they take decisions in the government that affect roads, for example, they're affecting tourism because they're giving access or not access to going there.

Or if they make a decision in health and they decide not to go against the cholera or against the plagues and stuff like that, then that has an effect. The security decisions, not being aware of what it means internationally to have the security problems that we have, those are things that people in general don't understand. So tourism is not respected for the force that it really is.

It does not have the weight that it should have. And that means that our minister is not very powerful within the governing body either. He's a minister of tourism.

He's not even a minister. He's the president of the ICT with a rank of minister given to him. But it's not a ministry, right?

It's not a ministry. So that shows you how little importance they give to tourism because we can't get people on the table, knock on the table and say, hey, I'm here, you know, because we're not organized that way. That's part of what we're trying to change.

[Bary Roberts]
Well, I mean, or how many government ministers own hotels or have tourism businesses? I mean, it's very few probably. So they don't really understand that market.

[Richard Bexon]
But what they do have is Airbnb houses. And there we have our problem.

[Bary Roberts]
Correct.

[Richard Bexon]
Serious problem with informal renting of houses and stuff like that that are not paying the tax that they should and so are competing against hotels. And now at least probably 15% of all tourists that are coming to Costa Rica are staying in houses instead of hotels. That has an effect on your business.

[Bary Roberts]
Yeah, 100%. And again, I put a lot of pressure.

[Richard Bexon]
It puts a lot of pressure on the local communities that they're not ready to produce and serve.

[Bary Roberts]
Yeah.

[Richard Bexon]
So it's very interesting. That's a serious problem that we have to deal with.

[Bary Roberts]
I mean, we paint a pretty bleak picture here or, you know, in this conversation here, Barry, that like I think anyone that would be looking to do invest in Costa Rica or have a hotel or be in tourism here is like no way. I mean, security, you know, the lack of kind of, I mean, I would say the, you know, the support by the government, like, you know, the exchange rate fluctuations. I mean, is it as bleak?

Would you start a business today, Barry, in Costa Rica? Would you advise people to do it?

[Richard Bexon]
Yes, I would. Because even though these problems are there and we tend to look more at the things that we have to fix and the things that are working well, you know, because if it's not built, don't fix it. Right.

So we work on the things that we need to fix. But I think that there's there's there's a quality of lifestyle here in Costa Rica that you can't find anywhere else, both in relationship to nature and relationship to people and the rest. So living here is a very comfortable place to live.

And in effect, your business do to generate funds, but what you're trying to do is improve your quality of life. Yeah. So your quality of life can be in Costa Rica much better even though you don't have the resources that maybe somebody who has a lot of money has.

[Bary Roberts]
Yeah.

[Richard Bexon]
But people who have a lot of money also have a good quality of life here too, so it's not a problem. So I'm not negative against the country. I think the country is a unique little jewel.

I think we have a unique history, a unique opportunity, and we go through ups and downs like everybody, and we learn through the things that we're not doing. We have to be very careful and we have to be very awake at, you know, the calls that are being made to us are, hey, wake up and smell the roses. Things are happening that you don't need to happen and that shouldn't happen and that have been happening.

But yes, I would invest and I would try to invest in something that's consistent with Costa Rica, which is a combination between tourism and real estate and also with involvement of local communities. There we start giving a solidified situation that helps everybody and protects everybody and generates a community that is really prosperous and provides that environment that you want to have for the quality of life you're looking for and for the experience you're looking for. And this is what people come and they see.

I mean, they come and they go into the, you know, to the houses of our workers and their grandmother is making tortillas and doing things and stuff like that. That blows everybody's mind. I mean, I have kids who come to the farm and they've never even seen a cow milked.

They think milk comes in boxes, you know, because they've never seen how it works, you know. So those are things that I think. So I think that we do have to be very careful.

We have to be very realistic as to what we're doing when we invest. You absolutely need to have very good partners such as yourself in terms of the knowledge that you have and the understanding that you have, how to do it, how to play with the local situations, good legal advice. You have the contacts for good legal advice, for good financial tax advice, etc.

And if you do things right, you're going to do well. You can do that, but it's got to be done and it's got to be done with a perspective of integration and of community sustainability as part of what you're doing, not just a business, but it has to be a business that gives back to the community so that the community grows with my business and my business grows with the community. So I think in that, with that perspective, this is an ideal place to invest because the type of tourism that comes to Costa Rica, Richard, is looking for these small experiences, these personalized experiences, and this is what Costa Rica can really provide.

[Bary Roberts]
I mean, I think you said something there, which is that when you don't integrate with the local community and provide that authentic experience, which is what people are looking for, you're not going to be as successful in the short term and probably not in the long term either. When we look at the properties here in Costa Rica or the businesses that have done that, I mean, they've been around for a long period of time.

[Richard Bexon]
Yeah, absolutely. And they've made the communities thrive with them and they thrive with the communities and that's what we need to do. So if you're going to develop, don't come and try to impose a different style of living.

Try to adapt the things that you can bring because people like yourself that have come here, now you're a Costa Rican, so that's a good one. Congratulations.

[Bary Roberts]
Thank you.

[Richard Bexon]
But we have to appreciate what a lot of foreigners have come to Costa Rica many years back and started. Our first receptive tourism started with National Geographic and Audubon Society groups. That's when we started our naturalist type tourism.

So we have to be thankful for that. People who came and invested in hotels and stuff from Costa Ricans didn't see the business. So we are very open to foreign investment and we love foreign investment, but we do like people to incorporate into our society and add to our society instead of coming to impose on our society.

[Bary Roberts]
Well, look, I mean, I think anyone that's trying to impose on society or change a culture here in Costa Rica, good luck. I mean, it's like, I mean, you're trying to get someone to turn up on time is difficult enough. I mean, if you try and impose your culture on that person, like they're never going to turn up and you're never going to get anything done.

I mean, just don't swim up river in this country, just float with it down and kind of roll with the waves and everything that's there in the rocks. Like if you need to learn to be patient in this country and adapt to the culture that's there, because again, it will not adapt to you. It will not.

[Richard Bexon]
No, but you can influence it.

[Bary Roberts]
Correct.

[Richard Bexon]
And those are the things that have been good for us with all these foreigners that have come in and helped us is that it has been good to have this kind of, you know, influence where we start looking at things differently. It's made us have to compete a lot better. For example, a lot of people here locally have been rebellious against the big hotel chains because the big hotel chains represent big financing, big companies, et cetera.

And they're coming to make off of it. But the truth of the matter is if we didn't have those hotel chains, first of all, we wouldn't have the marketing and positioning internationally that we have now to bring people. But on top of that, they're the ones who brought the high level management.

They're the ones who taught us how to do things better, how to how to service at the level of the international standards and not at local standards. So you have to take things in a balance. And that's one of the nice things about Costa Rica is that balance is what we're looking for.

And that's what we we found throughout the whole development of tourism. And I believe that real estate is incorporating that sense. It's been a lot more recent, for example, that tourism companies have recognized the transcendental importance of real estate within the development of tourism destinations.

I mean, if I don't have real estate development, where do I put my employees that I would normally rent to my clients to be able to stay? Or do I get housing? How do I get schooling?

How do I keep my employees if I don't have schools? Well, to have schools, I need residences and things like that. So we're starting to see more.

That's why we're pushing so much the development of sustainable tourism on the basis of regenerative development. We need to start with bottoms up local governance, incorporation of the local communities with the macro planning. And it has to work both ways.

It's like building a tunnel. You need to work from both sides towards the middle. You can't work from just one side.

[Bary Roberts]
Well, it's going to be interesting to see, you know, again, where real estate kind of goes in Costa Rica. But I mean, if the past is a predictor of the future, which a lot of the time it is here in Costa Rica, wherever tourism strong, real estate will always be strong.

[Richard Bexon]
Yes. And that's a good thing. There is a balance that needs to be looked for.

I mean, in Guanacaste, as you well know, now we have houses that are totally out of the reach of Costa Ricans in terms of the financial cost and even for renting. Things like that are extraordinary. But on the other hand, that also brings a flow of money into the thing.

You hire people, you have to have services and the rest. So so you have to look at it in a balanced form. So if you can put in indicators, social progress indicators to the communities where things are developing and you can see those indicators improving, then you're doing OK.

It's when those indicators don't improve, then you're abusing and that's when you have to make a corrective move.

[Bary Roberts]
Yeah, I agree. I agree. Well, let's change gears a bit.

I mean, if you had a time machine, you know, to travel back 20 years, Barry, and you were to invest in something in Costa Rica, what would it have been and why?

[Richard Bexon]
Well, it was and it would still be is anything that has to do with sustainable tourism and incorporating the local production into the local production of supplies included into the development of the services that we provide to the tourists. Because I believe that one of the things that we have lacked a lot on is we've imported a lot of food goods and stuff like that when we should be producing them. And then we bring them from other areas instead of and have all the cost of transportation and stuff like that.

When there's all the locals, I mean, the guy who's my waiter, his parents probably have a little property nearby that they have a huerta on where they have a little garden. They can generate the salads for my clients, that kind of stuff. So I have always worked in that area and I would continue to work in that area and trying to bring the community more involved into what we're doing on the basis of things that we've learned.

And as I pointed out, regenerative development is a new science to a certain degree or a new philosophy, if you want. But it's very, very to the point and very correct in terms of integrating all the different aspects so that you feel satisfied so that your quality of life improves, but also the ones of your employees and of their families as well. And that's how we're going to have long-term profit.

And that means also taking care of nature. I mean, if we don't take care of the nature, I mean, nature is our major attraction. So if we don't take care of nature, we're screwing ourselves.

But then again, if you have that kind of stuff, you diminish physical insecurity because you have less crime. Because more people have resources and they don't have to look for other sources of how to feed their kids because they have enough money to feed them with their jobs and the things that they're doing. And it's a cycle.

And it's very, very preoccupying to see how, in general, the whole security system is falling apart, not only in Costa Rica, in general, in many, many places. But Costa Rica is not an exception. And we have a serious problem that we need to solve very much so.

And we don't want, we have places, you know them, like Santa Teresa and others that are becoming almost like little Miamis. I mean, you know, they're a whole different type of development because there's no Planes Reguladores. So if I were to ask for one thing right now, if I were to decide one thing that I would want for tourism, it would be a national tourism policy that forces everybody that gets any kind of public financing of any sort to have to include the priority concepts and mapping of tourism development in Costa Rica within their planning structure and their execution of things.

To me, that would make a big difference. I mean, the big problem is, you know, we have 85 different municipalidades in different places and only three of them have some kind of knowledge of tourism, none of them, none of the rest do. And most of them don't have Planes Reguladores, which are the, you know, the plans for regular zoning plans and stuff like that.

And if you don't have zoning plans, then it's up to whoever is in power at the moment to decide whatever he wants in terms of whether you can use it or can't use it, how much it costs, how much it doesn't cost, et cetera, et cetera. So we need to develop this very, very urgently. We need to develop the zoning plans for all the different areas of tourism destinations that need to, because those are the ones that are fastest, being developed the fastest.

And those are the ones that need this kind of protection and care as soon as possible.

[Bary Roberts]
Barry, we talked about if you could go back 20 years, but if you were investing today for the next 20 years, like where would you be investing and what would you be investing in?

[Richard Bexon]
Again, I would be investing in the combination between tourism, real estate, and community development. And I would do it in rural zones and in coastal zones, particularly in the coastal zones, which are really, really needy of being, they've been abandoned and forgotten for many, many decades. And so we need to develop them.

And they're closest to our main attractions as well, which is interesting. So we need to be able to have the attractions for the tourists, but we need to provide an ambience by which the experience will be. If we can do that and we can guarantee them the improvement of the quality of life of the societies, then we will have educational systems, health systems that will provide us with the workers that we need to be able to continue to develop our tourism development.

And it will go through different stages and different phases. I mean, at some point, your real estate will be more important and more of a priority than your tourism. At other points, it'll be your tourism.

But then at other points, your community development has to catch up. And if it doesn't, then you have a discount.

[Bary Roberts]
Which is usually last.

[Richard Bexon]
Which is usually last. So that's where I would invest towards the future as well. And I think that's a long-term guarantee.

[Bary Roberts]
Any particular vehicles, things that you would do that you think that would cover those things, just to give people that are listening here kind of a bit of an idea of like, you know, because what you're saying is beautiful. I mean, it's real estate, it's tourism, it's community, bringing those three things together, you know, but what would be some examples, Barry?

[Richard Bexon]
Well, Richard, the thing is, you know, it depends on where you're working it, you know, a local area, how big the volume of attraction of tourism is and what you can do with it. That's going to have a simplification. I think that you need to start by doing individual projects that are, you know, very within your grasp to do things properly, but that have enough pressure on the community to be able to influence the community positively and to influence the response of the community towards your project as well.

Because that's going to help you in security, help you in employees, help you in all kinds of stuff. But it's hard to say, you know, I mean, I think you need to look at properties that are properly set up legally, that you don't have a legal problem with them, and that they can be properly used and explained that they have the zoning. The zoning that does exist does allow for developing what you want to do.

And then you have to go to the positions, make sure that you're starting to work in places. See, it depends on how adventurous you are. If you want to go on a place that's fairly close, you could go someplace close to Hakko, for example, and do something like that.

Or if you wanted to really get out there in Matapalu and do something that's very, very unique and very isolated, which is part of the good thing about it. Unfortunately, there's all types of people. And actually, it's people like you that can best advise these investors as to where to invest, depending on what they want, and make it so that they have fun doing it as well.

They need to, if they're going to come and invest here, they need to come and look at it, not just as a business. They need to come and look at it as it's something that they want to do, that they're going to enjoy doing, that they're going to be able to enjoy in the future by using it, by renting it, by whatever. But it's got to be an incorporated thing if you want to make it last.

If it's just a business, it's going to be run over sooner or later.

[Bary Roberts]
I 100% agree. I mean, to do anything in Costa Rica, you've got to have fun. And I won't take on a project that's not fun.

It won't work with people that don't want to have fun. I always say I'm a little bit cheeky. But I think it's part of the DNA of what makes Costa Rica- It's possible.

[Richard Bexon]
It's possible. And that's a great thing.

[Bary Roberts]
Yeah. Okay. I've kept you long enough, Barry.

I know you're busy. But my last question for you, but I think I know the answer for it because you've probably answered it. But if you inherited $500,000 and had to invest it into a business or real estate in Costa Rica, what would you invest it in and why?

[Richard Bexon]
Okay. I would not start up a project on my own because you need to have working capital and you need to maintain things and the rest of that would diminish what you have available. So I would seek out what is a project that follows my ideological principles, my protection for nature, my protection for the communities, et cetera, and then invest in that and maybe have an option for buyback and for expansion that would allow me to invest.

Now, some of these projects will allow us to invest and get guaranteed by means of property. For example, they'll let you build a condominium within a development they have. So you actually have a guarantee in that sense, if that's what you like.

But if not having shares within a company that you can do it, things like that would also be, but I wouldn't try to do it on an individual basis unless I was going to live there. See, there's a different ballgame. If I'm going to live there and run it myself, that's a different ballgame.

If I'm going to have somebody else run it, it's a whole different perspective.

[Bary Roberts]
I think you're the first person after 158 episodes that said that you would seek out something that's already existing and invest in something that's existing as an investor, rather than typically it's, I'll build a hotel. These are the businesses that are missing. I'll buy a vacation rental.

It's interesting what you say, just because again, you mentioned there at the beginning of the conversation that the plight of the hotelier sometimes is access to capital. It's access to capital to develop, build working capital, run their business, et cetera. So investing $500,000 into an existing property to either help them expand, improve, increase ADR. That machine is moving. If you just feed that machine, it could move quicker.

[Richard Bexon]
Well, and there's one other thing I would add to that. I hope you come with a different perspective that will make the company change its ways so that it doesn't have the same problem in the future. And we look for companies that need to strengthen more their community development or need to strengthen more their integration with nature or things like that, and bring the money in to do that.

Say, okay, this is going to be part of your project, but it's going to do that. That's going to end up giving you much better value for your company anyhow.

[Bary Roberts]
You see it in hotels, Barry. I mean, where there is a strong connection with the community, the staff stay there longer. They're happy.

I mean, I'm just going to take the example here of Arenas Del Mar, with hands that they're at Cayuga, they have a big focus on sustainability and employing local people, et cetera. And you can just see, I mean, the staff have been there forever and they're happy. People are just blown away.

Every time I come back to the hotel, the staff are the same.

[Richard Bexon]
Well, but let me point something out to you, which is very interesting. One of the other hotels, and I'm not going to mention the name because it's an excellent hotel and it's been here for a long time. And they had a tremendous identification with the people in the community, in the local community, but they did not integrate themselves enough in the community development.

So now they are losing 15 year employees because the employees don't have schools for their kids. Wow. You see?

So you have to look at the whole picture, you know, see how you can really help the community development. If the community had a high school that could take their kids, they would stay working at the hotel because they love it and they're great. And it's a great hotel.

It's one of the icons of sustainability of Costa Rica. And yet they're going through this kind of a situation. So those are the things that we need to be very careful with, you know, and that those are things that would make a big difference because having the proper employees and having them stay on and become part of your family and have their identification with the clients is the best asset you can have.

[Bary Roberts]
I agree.

[Richard Bexon]
So if I can provide them, even if I take that 500k and invested in providing them with means by which they can stay, which could include building a little school or something, and then the ministry can put in the teachers, et cetera, that might be worth it for the investment in my company.

[Bary Roberts]
Correct.

[Richard Bexon]
Those are things that need to be looked at very, very carefully, but there's all kinds of alternatives here. It's a great adventure country. It's got so many alternatives, so many different possibilities and they're all fun.

So I would encourage people to come and look at it, but come with an eye of, okay, we're going to do a business, but we're going to have fun while we're doing it. And we're going to contribute to the improvement of our planet by doing so.

[Bary Roberts]
Awesome. Barry, this has been amazing as always, buddy. I really appreciate you taking time on this morning and sharing some of your SAGE knowledge with us.

So thank you very much.

[Richard Bexon]
No, thank you. And thank you for the work you're doing because I know you're guiding people properly in the direction that should be. So I'm very pleased to have you and I'm much more pleased now that you're Costa Rican.

[Bary Roberts]
There you go. I mean, I always say no one's losing money on my watch. So awesome.

Thanks very much, Barry.

[Richard Bexon]
Take care, Richard. Good to see you.

Let's Get in Touch!

We chat with Bary Roberts, one of the Godfathers of Costa Rica Tourism, about his viewpoint on Costa Rica, its future and his advice for anyone looking to make a sustainable investment in Costa Rica. He also gives maybe the most unique answer on where he would invest $500K in Costa Rica.

Free Consultation: https://meetings.hubspot.com/jake806/crconsult
Contact us: info@investingcostarica.com

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