92 Vacation Rentals and Real Estate Investing

[Richard Bexon]

Good morning, Ben. How are you doing?

[Ben Rutherford]

I'm very good, Richard. How are you?

[Richard Bexon]

Very, very good. I really appreciate you taking the time as I know that you're very, very busy, if not probably one of the busiest realtors that I know in Costa Rica. So I really appreciate you making the time for us.

You're very welcome. Great. Well, Ben, I mean, you've been in Costa Rica, I mean, you've been in Costa Rica for quite some time and you've also been in real estate for some time, but I mean, what has really surprised you in the last six months specifically?

[Ben Rutherford]

I think, Richard, that's a good question. I think what has surprised me so far, you know, is I write an article for each issue of Costa Pacifica Living Magazine. And one of the things I've touched on a couple of times is that the Costa Rica market trends do follow North America.

And at this time, we don't see that happening because there has been a little bit of a slowdown and a price reduction in some of the North American markets. That said, we don't get affected directly by mortgage rates. Say, you know, the mortgage rates increasing in North America aren't affecting us in Costa Rica because our buyers are coming with cash.

We, they, you know, they can't, expats don't have the opportunity really to get mortgages. So it would affect us maybe indirectly if say, you know, a buyer is, was looking forward to getting, you know, $1.2 million on their house and back home. And now they can only get, you know, $1 million.

It's going to affect their budget of what they can afford in Costa Rica.

[Richard Bexon]

Yeah, I mean, a million dollars still goes quite a long way though, right?

[Ben Rutherford]

Yeah, absolutely, absolutely. Yeah, we have, you know, we have some great inventory, but that is the most popular inventory under $1 million. So, you know, that 600 to $800,000 range is very popular and in very high demand, which is creating a shortage in the market.

[Richard Bexon]

Definitely. Well, I mean, I've seen two things which are interesting. A lot of people still looking to move down, you know, and especially the Southern Pacific areas with Vito or Hachal, those kinds of areas where, you know, where your market is.

A lot of people looking to move down. And then secondly is that like, there are quite a few unvaccinated Canadians that still can't leave Canada yet, you know, from what I've seen. So as soon as they can, you know, because I've got a couple of clients who are just like, I'm just waiting to get out.

So I think in July, there are actually a lot of them going to be coming down and, you know, that area is very attractive because it still has that, you know, the Northern area of Guanacaste is very dry, you know, and I'd say probably a little bit more Americanized than the Southern areas of like, you know, Dominica or Vito or Hachal, you know, that a little bit more authentic and raw and jungle and beautiful kind of coves and beaches.

[Ben Rutherford]

Yeah, absolutely. I think that's what, you know, that's what attracted us nine years ago. And we still have that feeling and, you know, that we're not, you know, I think the first time we went to Costa Rica on vacation, we went to one of these very busy beach towns and we're like, wow, pizza hut and subway.

And like, this is not what we expected. And then our next vacation, we went further South. And as we were just driving along the coastline, that Southern Costa Viana, the Wales coast, we were just, you know, wow, this is what we thought we were going to see when we first came here.

And it's just, yeah, it's just a beautiful, beautiful region.

[Richard Bexon]

Yeah. So, I mean, just to reiterate, I mean, you're not seeing any signs of really a call off in your market in the Southern area.

[Ben Rutherford]

No, not at all. Not at all. And, you know, we do have lower seasons.

You know, May is typically a lower season and we try and beef up our inventory at that time so that we're ready for, you know, July, August is very busy for us. Usually, you know, two of our busiest months of the year. And then, you know, it may slow down a little bit, you know, with buyers coming in in November, but, you know, with our rainy seasons on the Southern coast, you know, starting in May and then running through to December, that's when the serious buyers are coming because they've come down, like I was the same way.

I, you know, was just there on vacation trying to escape Canada and the cold winters just for a couple of weeks. And so when we got serious about buying, we said, okay, we've got to go and see what everybody's talking about. And we, you know, we show up in September, which can be a rainy month, but still beautiful, glorious, sunny days.

And we're like, this is easy. So, you know, and then we're hooked.

[Richard Bexon]

Well, I mean, it makes it easy to see property sometimes as well, because again, you know, you may have renters in them in other times of years. So, I mean, I love September and October, just because again, the rivers are running, you know, it's crystal clear water, there's waterfalls, the country is green, the birds are out. And again, you can get in to see properties that maybe, you know, during January, February, March that are very difficult to see.

[Ben Rutherford]

Yeah. Most definitely, it does make it a little easier, but you know, it still can be challenging with the rental market because of the pandemic. We, when the country opened back up again, people didn't care what month it was, they were traveling.

And so many people, you know, and that's why there's such a high demand in buyers because people can work from all over the world now. And, you know, so I've had, we've had friends come stay with us for a week or two, because they can work from anywhere. Some of them not even telling their work that they're in Costa Rica, you know.

[Richard Bexon]

Amazing what a VPN can do.

[Ben Rutherford]

Yeah, it's hard to explain the sounds of the toucans and the howler monkeys in the background when you're on a Zoom call.

[Richard Bexon]

Very true, very true. I mean, what are the hot markets in your area, Ben? I mean, what's stuff that just does not stay on the market that long?

[Ben Rutherford]

Well, it's interesting, you know, that's an interesting question because it's not necessarily just about an area. For us, it's the topography. So we're the only part of the coastline where, in Costa Rica, where the mountains just rise right up out of the ocean.

So you can get some fantastic elevations for cool evening breezes, you know, where we are at a thousand feet elevation, we're only, you know, four minutes down to the coastal highway, and then another 10 minutes to town. But, so it's a very popular area for people who want ocean view villas. And then, you know, because of that topography, but then it's very popular in the beach areas like Bahia and Matapalo and, you know, where you can be by the beach and walking distance to the beach, very different buyers.

Absolutely. You know, we don't, I don't have many clients at all that would say, oh, we want to see both. They're there for one or the other.

[Richard Bexon]

Yeah. And I mean, Ben, what would you say about the rentability of one compared to the other? Just because a lot of people that listen to the podcast are also building vacation rentals or looking to make, you know, some form of investment here with a, what I'd like to call a lifestyle return, something they get to enjoy while also getting some returns from it.

You know, I mean, does one rent better than the other, in your opinion?

[Ben Rutherford]

Yeah, ocean view definitely rents better. When you, you know, when you take a poll of friends and say, when you go away on vacation and you have the option when you're staying at a hotel to have the garden view room or the ocean view room, most people will say, oh, we spend the extra $50 a night for the ocean view room or $100 a night for the ocean view room. And, you know, because they may be coming from, you know, an inland city in North America where they don't have an ocean view.

And if you're gonna be by the ocean, sure. I mean, so they do rent for more money, not necessarily better because there are people, you know, I was talking to Adobe Car Rental. They're the ones that we recommend.

And they were saying, you know, we still have like 60% of our car rentals are two wheel drive but our area is it's important for people to have four wheel drive. You can stay at a two wheel drive rental, but if you want to explore, and that's what we're attracting is those explorers, those adventure travelers, they should have a four wheel drive car to get up and down those mountains. And even when I'm selling to my clients and they say, you know, oh, we want to have a two wheel drive car because we're gonna be living down here in the flats by the beach.

I'm like, well, that's great. But please remember, if you ever get invited for dinner, it could be up a mountain. So you're not gonna be able to go, you know?

But, you know, back to your question on rentability. I do tell my clients, you know, don't expect, you know, or expect to cover your costs if you're buying a two bedroom home, regardless of it's, you know, down by the beach or up on the mountain, but don't expect to be coming down to a full Costa Rican bank account because, you know, you need a property manager, they're gonna take a, you know, a cut of the monthly fee plus a cut of the gross revenue, you have maintenance, but it is very wise to rent your home in the human climate because as you have people coming and going, you also have a maid service coming in and that's paid for by your rentals.

So think of it that way, like, hey, I'm not gonna, I don't want you relying on making money on this rental. Now, when you get up to three bedrooms and four bedrooms and more, then you are opening up the market to, you know, families traveling together and people want rental homes. They're, you know, because of what we've gone through the last couple of years, they're not as much into hotels and being around big crowds of people.

So in the resorts, and we don't have any resorts in our area, you know, the largest is about 30 rooms. So you could get very good rent. I've seen, you know, four bedroom rentals net $70,000 a year.

[Richard Bexon]

That's great. Well, I mean, I appreciate your honesty, Ben, because I've heard people, you know, people before working real estate throwing around 10, 15% returns, you know, which I think is pretty, I'm still trying to figure out on the model how that would happen. When you're not doing it yourself, you know, you're not there on site.

So I, you know, I, to the listeners there, you know, Ben, I think we'll always be very honest and direct with you on what you can make and what you can't make. So I appreciate that.

[Ben Rutherford]

I don't want any false expectations. I mean, the good thing that's a challenge for us realtors in these areas is it's very rural, it's small town. And I just get, you know, I find that, you know, there are challenges moving to a foreign country, but it's wonderful talking to clients in six months after they've been there and hearing about, you know, what they're like, what their version of paradise is.

And that, you know, my job isn't just to sell them a home, it's very involved even afterwards. I do get clients, you know, messaging me on WhatsApp and saying, hey, you know, what dentist do you use? Or, you know, what doctor do you use?

You know, what pharmacy or, you know, what bank do you prefer? You know, it's a relationship that's going to continue. Your clients become your friends.

You know, you see them socially, you see them out, you run into them in the grocery store, that type of thing. And it is nice when, you know, they've got good things to say about their new life.

[Richard Bexon]

Definitely, definitely. I mean, talking inventory in your area, Ben, I mean, what's seriously lacking and what would you personally be developing or building?

[Ben Rutherford]

Oh, another good question, Richard. You know, a lot is lacking.

[Richard Bexon]

Sorry, I'm full of them.

[Ben Rutherford]

A lot, a lot is lacking, you know, with such high demand. So, you know, what is interesting is what we're seeing is what didn't used to be a part of the market segment is pre-construction sales. So there was some, you know, there was some pre-construction condo development, but those one-ofs where, you know, someone is coming down, they're buying some land, they're building a house and flipping it, you know, building a spec home.

You know, there, that is becoming quite popular. You know, my colleague has had, you know, three pre-construction homes go under contract in the last few months. Wow.

And that is a, you know, it's a great opportunity. It's also good for the buyer to, you know, get involved that way because generally, once the house is finished, the price goes up. Yep.

So, and they can have a little bit of say in the color of countertop that they want and that type of thing. And that is happening. I'm about to, you know, launch a two plus million dollar home four bedroom, fantastic ocean view that's pre-construction.

They've just broken ground. And I have another one that's 90% done at 2.45 million, five bedrooms with a gym and office option and bonus room. And, you know, that one's probably gonna be done shortly, but we started showing it a month ago and have been having great feedback on it.

But again, the price may go up when it's finished.

[Richard Bexon]

Yeah, I mean, typically you find that just because again, it's a finished product and also is the people building it, you know, what they've been through as well also gets, you know, the stress gets reflected in the price.

[Ben Rutherford]

Well, exactly. And, you know, to your question, like what would I be building? You know, there's for entry level, because so many people, young people are moving to Costa Rica and wanting to, you know, have their family there, their kids, that entry level market is great and a huge shortage.

You know, we have a WhatsApp group.

[Richard Bexon]

When you say entry level, I mean, what is that then just describing? The reason I say that's just a lot of people listening here or looking for buying and building here as well, you know, to rent or to resell. I mean, what would you say entry level is?

[Ben Rutherford]

Yeah, in the 350 range. Okay. But that's, you know, what I say down in the flats, like, you know, at sea level.

Entry level on the mountain has changed drastically. What used to be a home at, you know, 500,000 is, you know, could be 650, 700 now. That's entry level, ocean view, somewhat dated home, you know, perfect for the person who has some vision to say, hey, you know what, I'm just gonna, you know, I'm gonna update it, I'm gonna paint it, you know, and can still be a fairly new home.

I mean, an old home on the coast, the mountainside homes with ocean view, an old home is 15 to 20 years. No, it's an undiscovered area. The paved road only went in in 2008.

So it was the real adventurers who, you know, expats who started in that area.

[Richard Bexon]

I remember driving down, it was bumpy and took forever after Manuel Antonio. Yeah. You know, so, and I mean, that entry level, I mean, are you talking two, three bedrooms?

[Ben Rutherford]

Yeah, yeah.

[Richard Bexon]

Awesome, awesome. Well, I mean, again, if you were investing for the next five to 10 years in the area, Ben, I mean, what are some of the beach towns you'd be looking at in your area and why?

[Ben Rutherford]

You know, one really interesting area, I think just north of Domenical is Maripalo. Yeah. Just closed on a beautiful, you know, 2,500 square foot lot there.

Walk to the beach titled land. So not just, just back from the concession and you can still hear the ocean waves hitting the beach. Beautiful, long, kilometers long, miles long beach there.

And it's kind of the undiscovered, I feel, area. There's still some really good value in purchasing, you know, a bit of a shortage of land available, but as people start, you know, subdividing the properties and selling them off. Yeah.

You know, that's a really good, a really good opportunity, I think.

[Richard Bexon]

Yeah, I agree. I mean, there's a lot of stuff happening in Portolone and, you know, all those areas above it as well. I know I saw a project there the other day, I think this New York development group had it, you know, and they're looking to sell it and it's got quite, it's a large development that they have there.

And at some point they're going to sell that. And I mean, that's really going to put Maripalo on the map. And I've been staying at Maripalo.

It's beautiful. It's raw, it's authentic. Yeah.

So I think that's great.

[Ben Rutherford]

I have friends and, you know, past clients, friends now that they will drive 20 minutes from Uvita, you know, 30 minutes from Uvita to Maripalo to walk their dogs every morning because it's just so undiscovered and there's such a long stretch of beach, you know, that the dogs could just take off and they're not bothering anybody and, you know. Yeah.

[Richard Bexon]

No, I'm a fisherman and I fish there all the time because there are a couple of river mouths there. So it's good for snook and snapper and those kinds of things, so. Excellent.

Well, I mean, Ben, you're also, you also have a luxury bed and breakfast also that you run as well. Tell us a little bit about that.

[Ben Rutherford]

Yeah. Well, we, my husband, Nate, and I, we moved down to Costa Rica in 2013 and we bought some land mountainside and a mountain called Escaleras just above Domenical. And we built our house in three cabinas and we thought in our early forties, we were going to retire there and do that.

And that didn't, it was just, we were really lucky. It is, you know, it's called Tree of Life Cabinas and it's a, it's just a magical, magical property. And there's a, you know, a massive mango tree that, that's why it was Tree of Life Cabinas.

And there's this massive mango tree that we've built our house and our pool and our cabinas around. It's got a 70 foot canopy. It's all, and it, you know, you would think it was hundreds of years old, this tree, because it's so large.

But our gardener, his, his, his grandfather planted the tree 75, 80 years ago. And so that was really neat, you know, redoing the, you know, the landscaping around it and sitting with my gardener. We had a beer afterwards and he was like, arboles contente, you know, like the tree is now content, you know?

I'm like, I think he was really proud that we, we cherished this tree as much as his family had enjoyed the, the fruit from it and still do. But we, yeah, we just, we, we built three, three cabinas that, you know, they're 15, 20 feet apart. So they create enough privacy for the guests.

We started out doing breakfasts and dinners because I have a restaurant background and good food was a, was a big importance to us. And, you know, back in 2014, we felt like there was, you know, two or three restaurants that we could recommend, but I wanted to give that option to our guests. And then we slowly backed off on, on the food production.

And now we just do villa rental. Like we've, we've renovated two of them. One's now 700 square feet, the other two are 500 square feet.

And then, but it's not available to book because we've, you know, we're, we're on vacation right now in Canada, visiting family and friends. And then when we get back at the end of this month, we start renovating and we're going to renovate the place and then probably put it up for sale.

[Richard Bexon]

Good for you guys. I mean, I know, you know, I mean, I know running a bed and breakfast sometimes can be demanding, put it that way. And sometimes it can be a lot of work, but I mean, a lot of people listening here and a lot of people I've spoken to, you know, have that vision of owning a property and having some small cabins on it or running a B&B.

I mean, what advice would you give to anyone looking to do that?

[Ben Rutherford]

It's a, it's a fantastic life. It, you know, for us, it had a shelf life just because I went into real estate and thought this is, this is what I want to do. I mean, I just, I just love sharing, reliving that experience when I get to watch the feeling I got when we got our property and then reliving it every time we do a closing, you know?

But no, it is the advice I would have. It's actually what Nate, my husband taught me was, he goes, you know, all you have to do is be accommodating, you know? Remember that when guests get off the airplane, a lot of them don't have a cell phone package.

So there's no way to get into contact with them. Some of them book a month in advance and never reply to your emails about what time they're going to arrive. So, you know, but I love that fact that we're on property versus me being a property manager and having to go wait at a house for them because they may decide they want to, you know, in our directions, we would say, oh, make sure you stop at the Tarcolas Bridge and make sure you're on the way and see the crocodiles.

And here's a fantastic, the first beach side restaurant that you'll come to along the coastline and just after the Crocodile Bridge and, you know, stop there and have a platter of seafood and, you know, get them to start enjoying their experience. But as long as you're accommodating and they show up an hour late, that doesn't matter. They get welcomed with open arms and then you just play with the business and remember that the business can be what you want it to be, it's your business.

And when we started backing off and not doing breakfast for our guests, I was worried and, you know, that we had to, you know, figure out, we did add little kitchenettes to our cabinas. So they're very efficient, self-efficient that way. But, you know, what you offer your guests is what they're ready for.

You know, they read the description usually when they're coming down. And, but I think be accommodating is, you know, because same thing happens when they're on property. They've been there a couple of days, they ask for extra towels, of course, you know, everything's an of course and with pleasure, you know.

Not, no problem, you know, that drives me crazy.

[Richard Bexon]

Yeah, yeah. Well, that's a great outlook. I mean, and I think great advice there.

I was with a, I was actually yesterday when I casted with a couple who bought a place in Playa Grande, you know, and he was mentioning about putting, he was like, the area needs a sports bar. And I was like, dude, you don't want to do a sports bar. And he said, well, why not?

And I said, number one, it's too close to where your cabins are, your homes are. So that just cross traffic is going to cause a lot of noise. And secondly is like, what's the ultimate goal here?

Because if the ultimate goal is to basically have, you know, kind of, you know, residual income coming in, like that restaurant has a lot of moving parts. You know, it has a lot of employees and that their problems become your problems sometimes. So like really think about whether you want to do this.

I'm not saying you don't need to do it. I'm just saying, think about what the end goal is.

[Ben Rutherford]

Right, yeah, no. And we had that, you know, we had people while we were building give us their advice. And that's the thing, like, you know, the best advice I think to a buyer is ask a lot of questions because it is a different, it's a different country.

And there can be frustrations because back home, we always knew who to call when we needed a plumber and electrician, you know, but you're starting over again. And sometimes we're less patient in our forties and fifties. So, you know, that seems to be a frustration with people moving here, you know, and just let it roll off the back and eventually you'll find the plumber, you know, but we designed our home because I was in the restaurant business for 30 years prior.

You know, we designed our home. My brothers did the design for me and we designed our home so that we could turn it into a restaurant if we had to. If planes stopped running into Costa Rica, like they did a couple of years ago for a few months, we had the option of moving into our cabinas.

And then the restaurant turning into, or the home turning into a restaurant, that's how we designed it. So we could be doing, you know, 40 dinners a night. You know, luckily we didn't need to.

We took the opportunity to just enjoy, enjoy the peace and quiet and the life, the jungle life. But I can't imagine mixing, you know, I think you're definitely right. Don't mix cabina business with a restaurant.

And in our area of Costa Baena, there's, you know, it's still, if you build it, yeah, it's still, if you build it, they will come. There's still a shortage of rooms, especially in high season. You know, the constant with clients, you know, saying, hey, we'll be down there in January, but we can't seem to find a place to stay.

And that's two months prior, you know?

[Richard Bexon]

Yeah.

[Ben Rutherford]

Yeah.

[Richard Bexon]

Wow. Well, I mean, a lot of people at the moment, just because there is kind of a bit of an inventory shortage on finished homes, are looking to buy land and build a home. I mean, in your opinion, when should they do this?

And also is, you know, people are always asking about how much equity they're going to gain from this, meaning that the land plus the building of the home, and then what it's actually worth. I mean, how much do you think that they could be looking at making there?

[Ben Rutherford]

Well, it's interesting. I mean, you know, when we bought, people were pricing existing homes as land value, construction value, and that was your sales price. And now we are seeing people can buy land, build a home, even flip it, and make some money, because there's a lot of buyers, you know, especially luxury buyers.

They don't want to renovate. They don't want to go through construction. They just, they want turnkey, ready to go, and they're willing to pay for it.

And even, you know, mid-range buyers in the $1 million range, you know, they also, they just want to move in. Yeah, yeah. So there is opportunity.

To answer your question, there is opportunity now.

[Richard Bexon]

Definitely. Well, my last question for you, Ben, is I think I've kept you long enough, and you're on vacation, so I really appreciate you taking the time on vacation to come on the podcast, 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? Me?

[Ben Rutherford]

Land. Yeah. Yeah.

There's a couple of businesses available for sale, but I've already got things going on in my life that I don't want to be working. For maybe someone a little younger, that would be great, but so personally, my stage of life, just land, buy land, either sit on it or just start developing it.

[Richard Bexon]

Is there any particular area that you'd be looking at? I mean, you'd invest probably in the market that you know, but I mean, in which areas would you be looking? Further south at Tres Rios Chantales?

Would you be looking at Ochoa or Vita? Further north in Matapalo?

[Ben Rutherford]

I'm really stuck on my Ocean View property, and you know, when we sell, we're just gonna do the same thing again, but just, you know, build a house and a guest house, because I love to be able to have that opportunity to have a guest house for clients when they're coming for closing, or, you know, friends and family. You know, when I moved from Toronto to Vancouver, and I also lived in Dallas, Texas, didn't have a lot of family and friends visiting, but when I moved to Costa Rica, people were visiting us all the time and still are. It's amazing how you get more friends when you move to Costa Rica.