201 Top Costa Rica Broker shares where he'd invest

[Richard Bexon]

Good morning, Scott. How are you doing? 

[Scott Cutter]

Morning, Richard. Always a pleasure. Doing great. Blessed to be busy, happy and healthy, which is the key things that make life good for me down here in Costa Rica.

[Richard Bexon]

That's true. We sometimes forget how good that we have it in Costa Rica until you go somewhere else. But yeah, we do have it pretty good down here, buddy.

Well, awesome. Scott, my first question for you. I mean, markets have had a great start to 2024.

You know, real estate worldwide is slowing down kind of a little bit. I mean, what are you seeing happening here in Costa Rica real estate?

[Scott Cutter]

You know, it's interesting. We get this question every single day from my buyers and my sellers. And the reality is, as a real estate firm and a brokerage firm, we're having a great year.

There's a great volume. I think Costa Rica's brand internationally is stronger than it's ever been. And ironically, the worst things get around the world.

I think the stronger the Costa Rica brand is, people want the Kool-Aid that we're selling here, which is a great lifestyle, happiness, peacefulness, nature. And the Costa Rican brand, I think, is as strong as it's ever been globally. And that translates to real estate transactions.

It translates to a great time here. There's just a lot of people that want this. Now, I certainly think that we're not immune to the slowdown in the US real estate markets, higher interest rates, more expensive capital, and that's affected everything here.

And so we've seen, in most of our markets, not all, but in most of the coastal markets in Costa Rica, and I think you've probably seen this on all your podcasts and your experience, is you've seen some price settling in most marketplaces. There's anomalies in some of the really boutique luxury five-star and highest end of the market. But in most markets, you've seen some price settling.

And I say settling instead of price drops, because I think the market's retreating. I think that coming out of COVID, there was so much pent-up demand, and Costa Rica had such little supply, you saw a lot of prices go skyrocketing, probably beyond where the market actually was. And there was a lot of speculative, maybe I'd sell, maybe I could get this.

And we're just retreating back to that. But it's not a fire sale market. You don't see prices dropping dramatically.

We just see people settling from me telling them that their house was worth $1.2 million, them saying, let's see if we can get $1.8 million, and they're coming down now to $1.4 million, $1.5 million, and the market's absorbing people that come into the marketplace.

[Richard Bexon]

Yeah, I agree. I think that there is definitely a settling in the market and a return to kind of reality. It got a lot, I would say, overheated there.

It was kind of overtaking a little bit. And now it's kind of cooling down a bit. But I mean, there are some markets that I'm seeing that are still going from strength to strength.

I mean, what are you seeing? Which markets have you seen where you're just like, this thing, I can't believe it just keeps getting stronger and stronger?

[Scott Cutter]

Well, I mean, I think where we're seeing the most growth in Costa Rica is in the highest end luxury market. So Costa Rica is a country that we've been here, I've been here for 29 years, you've been here for decades as well. Our luxury market, $750 to $1.5 million, that was the top end of our real estate market for 25 years. And luxury here, by definition, was still an infant in the global scope of things. So what's strength to strength? I think the highest end marketplace.

And when you look at some of the premier developments around Costa Rica and some of the new developments that are taking place in Reserva Conchal and Papagayo, where they're very much on the forefront of attracting the top end wealth, those guys are doing amazingly well. And they're staying strong. And I think Costa Rica, the reason they're going from strength to strength, as you say, is Costa Rica is attracting more high dollar wealth than at any point in its history.

And Costa Rica, in that luxury, true global luxury market, Costa Rica is still very much a value proposition. Is Costa Rica a cheap place to buy real estate still? No.

The days of coming down and buying a piece of beachfront land or something magical for 50 or 100 grand are gone. And there are certainly some old timers and people that will write out there about, oh, Costa Rica's been there, done that, it's already expensive. I just disagree with that.

And I think when you look at high end luxury markets and trends globally, in the luxury market, Costa Rica is still very much a value proposition. And there are areas where you can still get really good deals in Costa Rica. But where's strength to strength?

I think the highest ends of the market are strength to strength. And there's still multiple layers of growth. And the most sophisticated real estate investors now look at Costa Rica as a low risk proposition that's still very much at its teenage years of maturation.

And they look at what a lot of people locally will go, that's crazy. Can you believe that house is worth $3 million? Can you believe they sold that at $5 million?

And the savviest real estate investors from around the globe are going, can you believe we just acquired that for $5 million? Because they understand where the markets can go.

[Richard Bexon]

Yeah. Well, but also is because of the demand for rentals as well, high end rentals, the cashflow is also there to back those numbers up. It's not that you're making like a punt here where like, I might lose it or not.

Like, on the high end homes, they can make 10% a year, like the really high end homes.

[Scott Cutter]

They can. And the reality is in some of those players in that game where they understand they're looking at legacy investment, their portfolio investments, they're about relocating wealth from the stock market, from US assets, from bank accounts that are doing nothing because of what's happening with the US interest rates. And they're moving to places where even if they can get four or five or 6% returns, they're going, look, if I'm getting a CD-like return with a secure investment and property that's going to appreciate if I have a longer than a 12-month mental cycle on my real estate appreciation, and I can go and sleep there and use it for business and use it for family and use it for memories, et cetera, combining all of those things into one asset, which also makes them feel good, is a very easy justification purchase for anybody in that high net worth market.

We're seeing more family. I know you see it in your consulting work. There's more family offices looking at Costa Rica, looking at multiple purchases, looking at wealth diversification here.

So, you know, strength to strength is that. There's certainly some markets as well that I think are unique marketplaces. You know, Manuel Antonio, where I live and work is certainly a strength to strength market.

And it's just got, it's got supply and demand dynamic that very few places in the world have that allow it to retain that stronghold even in slower real estate trends.

[Richard Bexon]

I agree with you on Manuel Antonio. I mean, that's where I'm investing, where my fund is investing. Like I believe in Manuel.

I think it's going to have a renaissance, Scott. I really do. You know, and it's where I'm going to be focused over the next coming years and where my investors who are behind me are as well, because like, even the tourism, you know, I just look at tourism numbers and it just says Manuel Antonio, Manuel Antonio, Manuel Antonio.

You know, I've said it before with Arenal, just Arenal really is in that infancy stage, if that makes sense. But the hotels in Arenal do just as well as Manuel Antonio are getting, I mean, you've been to Nyada. It's average daily rate is higher, I think, than anything in Manuel Antonio.

[Scott Cutter]

That's the highest ADR, I think, anywhere in Costa Rica and probably the highest occupancy rate as well.

[Richard Bexon]

Yep. You know, and that's in Arenal. So, you know, it's, yeah, I mean, I agree on the Manuel Antonio.

There's a lot of, you know, my thing is there's a lot of older homes that need to be either completely remodeled or knocked down and rebuilt, if that makes sense. It's just the numbers sometimes don't always make sense from like you're paying a premium, if that makes sense, for a house that really is not that great.

[Scott Cutter]

You know, I mean, we're in that transition phase, you know, and that's where I think opportunity lies. I've sold two seven-figure homes this year that are total gut and remodels. And the people buying them have been told by everybody locally that they are bad shit, crazy, excuse my language on your podcast.

And they're both people that go, this has a great view, has a larger lot than anything in the area. And I don't care that I'm the crazy guy for 24 to 36 or 60 months. I know that in the 10-year cycle or 20-year cycle of this destination, there's no park that's more beautiful.

They love the fact there's a marina here. They know that there won't be 6,000 condos here. We can't have that kind of corporate growth.

And it means that it doesn't happen as fast as some areas like in Guanacaste, but they understand that that supply and demand dynamic protects them. And so they're buying those older homes. They're young and they're new and they're trailblazing in that.

I think we're going to see more and more of that over time. And one of the two things is going to happen. Either older homes and sellers who wouldn't give the value that the market needs to see them move are going to lower their prices because of life and time and et cetera.

Or the market's going to continue to evolve and people are going to go, I'll have the third one of these seven-figure homebuyers that just understands that it's just like opening a business. I had a guy who was opening a business. He said, Scott, I don't expect to make money for three to five years.

It's just when you start a business, you don't think that you're going to open your doors and get rich. And we're going to start to see more and more investors with that vision and that wherewithal and that financial capability of going, I know this takes time like a good wine to mature, but I know the fundamentals are here. And again, it always comes back to me, Richard.

I know that's why you're doing it here, both in the tourism and your history in tourism and real estate, nobody can ever outsmart supply and demand.

[Richard Bexon]

Correct. I mean, that's it. You can't.

[Scott Cutter]

That's simple. Everybody, where's the next male Antonio? There isn't another male Antonio.

There are other beautiful areas, but there's nowhere that has a seven kilometer stretch of coast, the road dead ends, the most visited or most one of the most visited national parks in Costa Rica, a marina, a small airport proximity to San Jose. There isn't a next male Antonio. There's going to be a new destination that pop up around Costa Rica, but this place, and that's why I invest here.

It's why my clients do well here. It has certain dynamics that can never change and can be replicated.

[Richard Bexon]

Yeah. There's a saying, the pioneers take the arrows, the settlers get the gold. I mean, the pioneers have already been through Manuel Antonio.

So become one of the settlers. Yeah. That's why I settled here.

Yeah. I think smart. I never really understood.

I mean, I always knew Manuel Antonio was a great destination, but until I started looking at the metrics and the demand of suppliers, you said there, I was like, wow, there are other areas in Costa Rica. Yes, you can invest. But as you said, the number one national park in the country, but it's hotel occupancy is like 70% plus it's vacation rentals.

You don't see that anywhere else.

[Scott Cutter]

And again, I have friends that are hotel owners. The quality hotel that you get here and what you pay here is mind boggling. And again, I have many big hotel investors that want to come here.

The issue is the hotel owners don't want to sell. They've got incredibly strong performing assets and they do upgrades here and there. But even with maybe 10-year-old installations that haven't evolved with some of the premier hotels, when you look at what a Nayara is getting in Arenal, if we had a Nayara here in Manuel Antonio, it'd be $2,000 a night.

It speaks to the fact that people want to come and they're willing to pay a premium and they're willing to, I don't want to say accept subpar, because the hotels are nice and there's certainly some beautiful hotels here. But I'd say probably 75% of our luxury hotel market here is older and is older and somewhat dated. And I think it's why places like Tulimar, like places like Los Altos that have brought newer condos and luxury villas to the market are doing so incredibly well and can charge incredible prices and run high occupancies because people want to be here and they're looking for any way to share.

[Richard Bexon]

Yeah. Well, I'm going to ask you a question here that the answer can't be Manuel Antonio. I mean, if you were to make a five-year punt, Scott, where would you invest in Costa Rica?

Because I'm sure you get this a lot.

[Scott Cutter]

You know, we do. And I am very bullish on the southern zone of Costa Rica. I think that there's two main areas where I'd look.

And the southern zone is an area for a five-year punt where I'm just incredibly, I think where most of the natural beauty that Costa Rica exports. If I went to Europe or the United States and said, describe Costa Rica to me, I think the description of 95% of the respondents would be what exists in the Manuel Antonio area south. You have lush rainforests, big waterfalls, all the wildlife, pristine uninhabited beaches, et cetera, et cetera.

And so I think having those core access and amenity elements or just core components that fulfill what people's visions are, that's always going to continue to grow. Now it's going to be slow and that might be a 10-year punt, but in general, I'm a big believer that the southern zone of Costa Rica is going to be where when we look 50 years from now, 20 years down, we're going to look and say, all of the growing pains, all of the mistakes, all of the stumbling blocks that it went through are going to be applied in the most beautiful place in the world in a better fashion in the southern zone. I think the other area I would look at is for a five-year punt is in Guanacaste, there are areas where there's new developments that have taken years to start to mature that are just now coming into a full blossom. You look at a place like Hacienda Penilla, that's an older development.

Hacienda Penilla has been there for 15, 20 years and there were lots and it was trickling along and they built the JW Marriott, but that's a destination in the Avianas area south of Tamarindo. Tamarindo is amazing, but it's dense already. You look at a place like Avianas and Hacienda Penilla, that I think the next five years there are going to be an explosion because they have the space, they have the proximity to Liberia, they have the infrastructure and world-class amenities, but they haven't quite taken that next tick up.

And when you compare it to Discovery or Papagayo or even some other places, the values there are still much more affordable. And so those are two areas where I think there's going to be a lot of growth outside of Manitonia.

[Richard Bexon]

I agree. I had a client the other day who we helped, 20 years ago he was like, I wish I would have bought in Langosto. He's like, but I'm buying in Avianas because I see it as Langosto 20 years ago.

And you've got that Ave Moana, Namundi that's going in there, you've got Hacienda Penilla. I mean, it's developing rapidly. It's still very naturally beautiful that area as well.

Exactly. So I agree. When you say the Southern zone, I mean, are you talking like Port Alon?

Or do you think it's like Uvita or Ochoa or you think even further South into the Oso Peninsula?

[Scott Cutter]

Well, no, I think when you go further South Oso Peninsula, that's not a five-year punt, that's a 10-year punt, that's a 15-year punt. I mean, we can't ignore Guanacaste is amazing and it's beautiful, but one of the major drivers there, it's just easy to get to. And you can't assume, and that's probably a very frequent real estate mistake.

People overestimate the average investor and tourist willingness to go an extra 30 minutes, hour, hour and a half, two hours. So I think that while the Oso in that area is stunning, I think that until there's an international airport in the Southern zone, you won't see that area flower the way it should. Now that's going to happen.

The country understands and already you're seeing at the government level, the first steps towards that. But if I'm investing in Oso or Jimenez or in the deep South, I'm talking about a legacy investment for my kids. It's a 20 to 25-year plan, not a five-year plan.

I think the five-year plan is more related to the area really from Dominical to Ochoa. And I know that's a big stretch of coastline and they're all very unique, but for the next five years, the reality is I don't see a huge difference in buyers going, oh, that's a little, you're already making a commitment to go down that's a three-hour drive from the international airport or a 45-minute drive from the local airport in Pez Vela or coming North from Palmar Sur. And I think that whole coast is really about nuances, but I think there's a lot of potential down there.

There's a lot of land there. There's a lot of real estate there. So the rental market is going to be slower to grow, but I think there's a lot of land appreciation there as infrastructure grows, as Uvita becomes a real, almost like a city center that becomes an anchor that allows Ochoa South and Dominical North to grow.

And there's restaurants and there's a great food scene and there's supermarkets and stuff. I'm careful about rental potential there, but I think in terms of value real estate acquisition, and that's one that you talk about, I do all the time. Why are you buying?

If you're buying to rent, get a one-bedroom studio in New York. It's still better than a 45-bedroom house in Omaha. And the same thing's true.

If you're buying to rent, buy in Manuel Antonio. Buy in a place where you're going to get less for your money that supply and demand works for you as an owner. If you're buying to own, if you're buying for use, if you're buying for legacy and you want to have some sustainable rentals, then I think some of those outlying areas like the Dominical, Uvita area offer some really great value acquisitions where you're going to get more real estate for your money.

But you got to know that you're probably not going to run anywhere near the kind of lucrative rental that you could run in an anchor place like Manuel Antonio.

[Richard Bexon]

Yeah, I agree. I mean, still Dominical does very, very well on rental fronts. I mean, Manuel Antonio is a lot better for sure.

But I mean, you're not losing any money, probably if you make an investment.

[Scott Cutter]

You can make money. And I've got friends that have highly successful, highly lucrative rentals there. But they work a little bit harder.

So we know that's one of the things I tell my, don't think that you can't make great money in Dominical and Uvita with a rental. You can make fantastic money. What I tell people is if in Manuel Antonio, you can make great money.

But I've got a guy I sold a $4.5 million house to. Never been to the house. He never met the property manager.

He's probably going to make a 9% return in his first year. And he's just going to get checks. And it's totally passive.

It's the machine is that strong. If you're going to go south, usually the people that are doing the most successful rentals either have some kind of really unique or iconic property, or they're more aggressive and integrated into their self-promotion using their business networks to get that auction. It's just because there's more homes.

And there's going to be more homes because there's more growth. So it's not as easy to that much money passively. You can be sustainable passively there.

If you want to be highly lucrative in those more remote markets and that's south or north, you just need to be more proactive.

[Richard Bexon]

Yeah, I agree. I agree. I mean, looking at Manuel Antonio, I mean, what are some of the, and I always like to ask because a lot of people are actually looking to make Costa Rica home now, you know, it's a little bit different than before where people were, you know, having vacation rentals.

People are seriously looking at Costa Rica as like, I'm going to live there. I mean, what are some of the services or businesses that you think are missing in Manuel Antonio?

[Scott Cutter]

You're asking me to give away the business model. I got two or three that I wrote yesterday because I, as I travel and I go to other places, I'm like that, that would be a killer operation here. This will be a great opportunity here.

You know, there's always opportunities in creative experience, ecotourism stuff. So friends of mine that started Paddle Nine, you know, years ago doing customized private waterfall tours. They have a huge robust, one of the best businesses going in Manuel Antonio.

One of my agents, Stopper Huckle has a vacation buggy tour. He has two modified Jeeps. They take people out in these modified four-wheel drive Jeeps out in the rainforest, wildly successful trips.

So as we get more big, I don't want to say institutional, but bigger tourism operators where you're in a bus going to do the event, anything that offers boutique, customized, personalized experiences, whether they're food related. I think that there's huge growth potential in the, you know, agricultural, rural coffee tourism. We are, you know, the Manuel Antonio area is an hour, an hour and a half from some of the most amazing coffee country in the world.

As infrastructure, it's been a bad road and it's not there yet, but as infrastructure improves and allows us to be an hour drive up to high elevation, best coffee in the world, there's going to be huge opportunities for people to get clients out of. It's not an overpopulated Manuel Antonio, but as Manuel Antonio develops, it gets denser. It gets busier.

It becomes to where you're always around tourists. And so people long for those, get me in my home base here, but get me out into authentic, real Costa Rica. And that's one of the cool things about Manuel Antonio is in any direction, you can drive 10 minutes and you're out in the jungle or you're out in the middle of nowhere.

And so I think any personalized tours that offer that, I also think that we're going to see a rebirth of our, you know, gastronomic opportunity here. We went through a place where Manuel Antonio was awesome because there was all this kind of great food. And then with so much tourism coming in, a lot of food can get plain Jane, where you go to restaurants and they're always full because the same supply and dynamic, but you're all getting the same fish filet with garlic sauce and the same sauteed vegetables and the same cup of white rice and black beans.

And it's cute and gringos love it because it's so different, but we're starting to now see people, tourists and people going, wait a minute, I'm craving something more authentic. I'm craving a higher food experience. Some of the destinations that are further away, Santa Teresa, Ojo Chal, Dominican, got well known because people that were doing food there were so passionate because they didn't have the volume of clients.

So it had to be a passion project. We're starting now to see opportunities here with people bringing back where clients are willing to pay. Again, we talked about that upper end, higher dollar market traveler and investor coming.

Those people are also willing to pay for experiences. So if to do high end cuisine or unique experience to be able to pay more, there's now clients that will pay more. And so I think there's a lot of opportunities in, just like we talked about in real estate, the newer homes, the renovation, things done at a higher caliber.

We need new construction. I think the same thing's true in food and tourism and all the services. It's just going to go from that immature first generation service and food market to everything up on steroids at a higher level.

[Richard Bexon]

Yeah. I mean, it's a cycle that we see kind of play out in multiple destinations. And Manuel Antonio has been through that cycle once and now the newer homes are coming in and it's going to go through that cycle again.

[Scott Cutter]

I've taken my daughter to a robust family reunion up in Florida. We're going to a beach destination there. And I was like, I want to do a beach bonfire for them.

And I went online because I would hear, I would just go get firewood and do it. And that's what we do. And in a 10 mile stretch of East, there's 15 companies that offer cushions on the beach and tiki torches and it's $25 for the cornhole game and this, that and the other.

And I'm like, I'm definitely going to do that. That saves me all the headache, all the permits are there. Those kinds of things that don't exist here.

And you start to think about that. If you and you're like, if a travel company could start to say, we can offer you for $350, you and 10 of your friends, a beach bonfire with cornhole and a beer cooler. You could sell that to every third tourists all day long.

And there's a hundred ideas like that, that you couldn't do before when our average tourist person was paying a hundred dollars a night and looking to do a $25 tour. But as we, as we evolve all those more of more polished curated experiences are going to be in high demand.

[Richard Bexon]

I mean, the, the, the tourists coming to Costa Rica has certainly changed. That's for sure. And as you said, and I completely agree, we are just getting started guys.

Like when you compare it to other destinations, like go to Hawaii and then look at Costa Rica. I mean, we're so behind, if that makes sense behind them, but it's the beauty of Costa Rica is it's been an organic growth. If that makes sense.

Yeah.

[Scott Cutter]

Well, you don't have to, you don't, and a lot of these curated experience developments, you don't have to, you don't have to be a billion dollar guy or a $20 million person to get in the game here. This is a place where there are investment opportunities and remodels and long-term plays and rental properties for virtually every level of investor. And I think the key is you have to be grounded and you can't think you're going to come to Costa Rica and you're going to be the first person to look.

You're not. And that doesn't mean it's a bad place to invest. I think it just means that you're no longer at a craps table, you know?

And, and, and trust me, the people that came here 25 and 30 years ago, yes, they were buying for pennies on the dollar. And yes, you will get sick to your stomach when you hear that guy bought that property for $30,000 and it's worth 30 million today. But that guy was, was when he put down 30 grand, he was crazy.

And everyone told you you're, you're an absolute lunatic to be doing that. And the reality is in most cases for 20 years, they were lunatics. And then time paid them back.

But it's a much safer place. There's so much more information for people out there now. And there's great guides to make sure they're not making mistakes.

So just don't, you know, I just encourage people do your homework. If someone's selling you something that's too good to be true, it is.

[Richard Bexon]

It is. Yeah. Yeah.

I mean, look, I said, you know, one of my questions here was like, what should people be wary of in Costa Rica? And I think you just said it there, which is when it sounds too good to be true, it very much 99% of the time in Costa Rica is.

[Scott Cutter]

It's a real market. So if you're coming for 100% returns and you meet a fast talking realtor or a cab driver or a waiter that says he's got something that's so magical, you can't believe it's true. Ask yourself, why hasn't Scott and Richard bought it already?

We've been here for 29 years. We're canvassing the market up and down. It doesn't happen.

There are great opportunities here. You can make great money here. You can live a great lifestyle here.

And you could have investment properties that I think add quality to your life, to your family life, to other things. And they're lucrative. But don't get fast talked.

And I will tell you what else. Vet the people you're working with. As Costa Rica grows and as opportunities do grow, there's more and more and more newcomers that are getting into the game that don't have the experience.

And I had a friend of mine post something that was really smart. Being here a long time doesn't make you smart. So balance experience with vetting people, asking for their references, checking into who you're working with.

I mean, I've got people that are here for 25 years and they've been here for so long, they're blind to the reality and they're cynical. So if somebody starts by saying, I've been doing it for 30 years, well, maybe you're stupid. It helps.

But you want to make sure you combine not working with a newbie that doesn't understand anything about Costa Rica, and that's just selling you hype. And the fact that it's great, you saw three monkeys and the sunset was beautiful. Slow yourself down.

I do that with most of my clients. And usually, if you're working with a good guide, they'll slow you down before they accelerate your process. And that's a good thing.

[Richard Bexon]

I agree. I agree, man. I mean, it's yeah.

And they'll usually be probably pretty direct with you as well. You know, they're very candid and very direct with you.

[Scott Cutter]

There's negatives. Manuel Antonio has a host of negatives and we start with those. If they're non-starters, good.

Let's just save time and go have a beer. But because Costa Rica is not perfect. It's just perfect for me.

And our goal, your goal is to help educate people so they can find the right place and the right strategies for them.

[Richard Bexon]

I agree. Well, Scott, I've kept you long enough. My last question for you, sir, if you inherited $500,000 and had to invest in business or real estate in Costa Rica, what would you invest it in, sir?

[Scott Cutter]

I would invest in the marina here in Manuel Antonio and in Marina Pesvela. We're doing some new condominium and villa development right now. I'm a believer more than ever.

And we talk about recession proof wealth. We talk about areas and marketplaces that never retreat. And more and more people are getting into boating, the fishing here.

It is the purest of supply and demand, maybe anywhere globally. When you look at there's just not many of these kind of marinas. So if you've got an extra half a million dollars, a million dollars sitting around, give me a call and I'll help introduce you to what we've got to offer here at Marina Pesvela.

[Richard Bexon]

Awesome. Well, Scott, I appreciate your time. I'll put all of your contact details down in the description.

But thanks very much for joining us on this new season of the podcast. Sounds good. Take care.

Have a good one. Bye. You too.