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Webinar April 2024

Webinar April 2024
Webinar April 2024

Podcast Transcription

[Richard Bexon]
There we go. Okay. So everyone can see my screen.

We'll get started here. I am English. So we'd like to get started on time.

I'm sure the people that have acclimatized to Costa Rica will arrive a little bit later. That's difficult. But thanks very much, everyone, for joining us for the first Costa Rica Investment and Real Estate webinar.

Our inaugural one. I've never done one before, but a lot of people have been asking me to do it. So here we are.

And we have the pleasure today of having basically myself, as you guys know, from Costa Rica Investments. Some of you guys have probably worked with us before or followed some of our LinkedIn stuff. And also Paola Rentana, who's a partner and lawyer here at Li Bu Shi, focusing on real estate and development here.

You want to say hello to the team or everyone there, Paola?

[Jake Alexander]
Hello. Hi. It's a pleasure to be here talking about investing in Costa Rica.

Always excited to join Richard in these endeavors. And I hope we are able to address any questions that you may have, which I'm sure are going to be a lot by the end of the presentation.

[Richard Bexon]
Fantastic. Well, again, guys, there'll be two kind of parts here to this talk that we'll do today. I'm going to focus kind of more on Costa Rica and investment data.

And then Paola will basically focus more on kind of the investment landscape and legal structures here when investing and buying property here in Costa Rica. So, again, today, I'll just quickly go over the agenda here so you guys know what we're going to talk about. I'm going to talk about country data.

So kind of more Costa Rica arrival data and also where that data is coming from, the growth in that data. Then I'm going to zoom in on locations in Costa Rica, all over Costa Rica based on that data. Then I'm going to combine that with a little bit of search data that we get on Google keyword search terms there, guys.

So that we're looking at kind of, again, vacation rental kind of data, arrival data in the country, and then also search data from Google there as well. I always like to take a look at search data as it's always indicative of kind of where the demand is or the intent of the demand and the location kind of is when it happens. And also just some opportunities that I can see looking at this data for any budding investors out there.

Then we'll jump over to Paola and she'll talk about how to invest in Costa Rica, kind of legal ownership and also considerations. And then we'll take some questions at the end. And there are some breaks within this because again, you know, country data and location data.

So I think if anyone has questions and wants to kind of type them away, feel free to. And we'll take a kind of a little bit of a break. My section will probably take, I'd probably say about 20 minutes.

Paola, I think your section will probably take about 15 minutes. Yes, sorry. About 15 minutes.

From my section, there's going to be a lot of data, guys. So we'll share all of this afterwards as well. So don't worry if it's like overwhelming some of the data.

I tried to simplify it as much as possible. But for some people, this data is going to be like, well, duh, Richard. And then other people would be like, wow, I never really even knew that.

But I'll share the slide deck that we have after this as well so that anybody that wants to take a further look at it with a little bit of time over coffee and kind of digest it can do. So let's get started here. I mean, at a macro level, Costa Rica's brand.

I think everyone's aware of the Happy Planet Index here. It's been ranked as one of the happiest places in the world from 2016 to 2019 and then also in 2022 as well. So Costa Rica's a happy place.

I think you guys know that. I believe Costa Rica's number one asset, of course, is its people. And I think for anyone that lives here in Costa Rica, definitely understands that.

We also have Brand Finance, basically. Brand Finance is a company that measures brand strength. Costa Rica's in one of the top 20 fastest growing brands globally, guys.

We also have National Geographic. In 2023, Costa Rica was voted the best Latin American destination. And International Living, for a lot of you guys that are aware, 2024 is the best place to retire as Costa Rica.

Maybe not the cheapest, but definitely, I agree, one of the best places to retire. So at a macro level, that's kind of just some of the stuff that's going on with the brand. When we look at investment data here, guys, this is pretty interesting.

It's basically from global data, came out in the end of 2022, 2023. This looks at for every dollar of GDP, what was the investment dollar received? And as you can see there, and this is the whole world, guys.

Like this is not just, you know, small up and coming countries. This is the whole world. So Costa Rica basically received for every dollar of GDP, $13.4 of investment. Punching well above its weight, as you can see there. I mean, we have, you know, countries like the United Arab Emirates. We have Croatia here, Singapore, you know, which are countries that have been established for many, many years.

A lot of that investment, as I'm sure a lot of you are aware, is coming from tech, you know, from businesses and also professional services, but also real estate and tourism as well. But I think that was the big thing that's recently come out is just Costa Rica really punching above its weight when it comes to foreign direct investment here. And I'm sure a lot of you are seeing that here as well.

And also when it comes to the brand of Costa Rica, just hearing more and more about it. I mean, it's been in The Simpsons, for God's sake. So it's a matter of time before it becomes a huge destination.

So, you know, as I mentioned there, Costa Rica is a strong brand. The bloom basically consulting looked at for the Americas kind of just its brand strength here. Costa Rica comes in fourth place, guys, which as a brand behind United States, Mexico, you know, and Canada.

I mean, there's some pretty strong brands there. Those top three and even above Brazil. Last year it was in in fifth place.

This year it's in fourth and continues to just kind of really just grow. And as a world rank, 31 of all countries in the world as a country, as its brand, guys. So I think we'll kind of consider to see that happen as we go forwards here in Costa Rica.

So, you know, just because we just seems to be going from leaps to bounds and getting stronger and stronger. So I would like to say Costa Rica kind of has a bit of a natural filter on investments and also its branding as well of everything. So difficult to do here that only the good ideas get through.

But that might not always be the case. But we'll see. So now kind of switching gears now into kind of, you know, we've looked at Costa Rica as a brand, its tourism.

Well, its investment data and kind of its brand ranking of now of just really looking at Costa Rica's country tourism here, guys. So I'm going to be looking here at Q1 arrivals, basically from 2019 to 2024. Why?

Just so I can compare apples to apples here so that we can take a look at Q1 being January, February and March, which is the biggest arrivals time in this country. So here just gives you an idea. This is all arrivals into Costa Rica, guys.

And, you know, 2019, we were basically eight hundred and seventy thousand. We saw a dip in 2020, of course, because, again, everybody's aware. And 2021.

Then we started to see a kind of 2022, a gradual increase with near par arrivals there in 2023. So we're kind of reaching, I would say, pre-pandemic levels back in 2023. And of course, 2024, setting a new record here with over 11 percent growth over 2019.

And I mean, it's pretty astonishing that some destinations haven't even come back to their post-pandemic numbers and Costa Rica continues to. I personally believe that Costa Rica will break all records in 2024. We are seeing some return to seasonality that like we had seen pre-pandemic, post-pandemic.

Even our low season was kind of somewhat not low anymore. It's kind of more of a midseason. And I think we'll see a little bit of a return to that.

But Costa Rica is just so much in the forefront of people's minds at the moment. I know that 2024 is probably going to be the best year on record. When we look at country arrival data of just seeing where some of that growth is coming from in Q1.

This is just the top 10 here, guys. Everything highlighted in green is kind of growth. Everything in orange is growth as well, but it's not as big.

And everything in red is kind of decline. I wouldn't focus too much on the percentages. I always used to say to salespeople, don't get confused by the percentages because that doesn't put food on the table.

The numbers do. So when looking at number growth here, you can just see the U.S. just outstrips everything here, guys. It's bigger than all the others kind of put together.

A 24 percent growth from 2019 to 2024 in Q1. In Canada, the growth there at 12 percent. But when you start looking at the numbers, guys, it really is pretty small comparative to the U.S. And I can't see that really changing much just because of the lift, the flights that we get in from the U.S. and just the demand for vacations during certain times of year. It's nice to see Europe growing again. We have flights from many locations in Europe. I'm not too sure that we'll get any new destinations.

We might just get a new volume of flights coming in. So instead of it being two or three times a week, we'll start to get it maybe four or five times a week because that demand kind of happens there. Now, we've looked at Costa Rica's arrival data.

We've looked at where it's coming from. Now I'm going to look at airport arrival data as well here. I want to put this in perspective that when I started in tourism in 2005, the split between San Jose and Liberia was 80-20.

So 80 percent arriving into San Jose, 20 percent into Liberia. This is what that looked like in 2019, guys, for Q1. So a 72-28 split there between San Jose and Liberia.

As we continue through this and we take a look at 2024, you can see the split here now is 64-36 here. OK, that's a huge movement there, guys. And I expect the Liberia airport to continue to increase with arrivals because that airport can expand, though, as well.

Whereas the San Jose airport really doesn't have much room for the room to expand. If anyone's flown in, you can see that it's kind of has development all around it. So I'm not too sure whether they would extend, build another runway or they could potentially maybe add a terminal or two.

But I mean, it's pretty busy at the moment. So, you know, I mean, just the growth there in Liberia of 46 percent is pretty outstanding. And I think we'll continue to see that.

I mean, San Jose is probably going to continue to teeter along, but not much. But we're going to see the majority of the growth coming into Liberia. I actually wanted to see if I could get any private flight data and not Taylor Swift's private flight data to Costa Rica, but like private flight data here.

And unfortunately, again, private flight data. So I wasn't able to get it that easy. But I'm going to have one of the analysts in our office just take a look at like how much private, how many private airplanes and flights are coming into Costa Rica.

I know every single time I fly in there, they're just lined up on the runway more in Liberia than they are in San Jose. So, you know, overall kind of flight arrival data continues to increase. Guys, Costa Rica has a goal by 2030 to get to five million travelers.

I think that's nuts, to be honest with you. I don't think they're going to get there. I mean, I think for, you know, shooting for the stars and landing on the moon sometimes, I think it's very ambitious.

I don't think, you know, we even have the infrastructure in place to manage five million tourists, especially over the next five to six years. I mean, we all know how slow things move in this country, which is the beauty of it. So I don't think getting to five million is going to be, you know, an easy task.

I think we're going to see more between the three point five to four million dollar number, guys. Sorry, four million number of tourists from the three point five to four million tourists. And, you know, my big question is, where are we going to stay?

You know, and the reason I say that is, you know, hotels aren't being built quick enough, guys. I mean, you can you can name on your hands hotels that have been built like larger hotels in the past five years and even in the past three years. I mean, permitting is just time consuming in Costa Rica.

I mean, it can take a minimum of three years just to break ground. And then from then you could be another two years of construction, three years of construction. So you could be looking at five years even before that you start getting your return.

And when you kind of put that together with other destinations, kind of with the cost of operating here and looking at other destinations, such as Mexico, the Dominican Republic, also Puerto Rico, like those numbers make more sense sometimes there. Whether that's the case long term, I don't know. But I think that the Cologne exchange rate at the moment is not helping things for for many investors coming to Costa Rica.

So that's where I'm starting to see is kind of a move towards more vacation rentals because, you know, they much easier to build, much easier to develop. And you don't need the water resources that you need for a hotel on that one as well. So, you know, I bring the question up there, but it's really kind of the move that I'm starting to see here of like vacation rentals operating as hotels.

I know because we're building some of them. And I know because we're also helping some property management companies that are also managing them as well. Any questions, guys from the audience there on any of this data before I start getting into the location data?

I'll just wait 10 seconds here. Actually, I think we've got one Q&A, right?

[Jake Alexander]
Yeah. Yeah, we have one in there, Rich.

[Richard Bexon]
So what is the rough breakout of where these folks are visiting in Costa Rica, Pacific Coast, Atlantic Coast cities and volcanoes? Great question, Chris. I don't have the answer for that.

The one thing that I do know is that when in the travel company, we had 70 percent of travelers visiting Arenal and Monteverde and then going to the beach that split between the Pacific and the Atlantic. I don't have also the cities. But what I typically would use for that is just, you know, the number of listings of vacation rentals in those areas can be used.

I'm just not too sure whether that data is actually captured as well. But yeah, I hope that answers your question there, Chris. If I don't know the answer, I always say to people I don't know.

And in this case, I don't know. But what you could do, I mean, just to give you an idea, was maybe look at vacation rentals on the Pacific Coast compared to these central areas and then also on the Caribbean side. But I think it's going to be far outstripped, probably like 80 percent going towards the Pacific Coast.

But those people also combining it with the volcanoes and mountain area as well. So it says here, describe how vacation rental operates like a hotel. Where's the line between operations?

Well, I mean, it operates as a hotel from the aspect of having concierge, including breakfast, those kind of things. Maybe not 24 hour, you know, front desk, but there is always someone there and not having, you know, kind of a fully functioning restaurant, usually more private chefs. So it's kind of just more of those light services, including breakfast, because who wants to make breakfast on vacation if you want lunch and dinner, having chef services and just having a concierge there.

A lot of homes now that we're working with on the higher end are also having house moms as well. So I hope that answers that one, Eduardo. The more development, the higher prices for locals.

Yeah, I mean, I would completely agree with that one, Michael. You know, the other option to that is it's also providing work for people as well. I mean, you know, people that work in these industries and also tourist industries are collecting 10 percent of the service.

You know, I'm assuming here that their boss is a responsible individual and passing that 10 percent service on to the individuals. So, yeah, I mean, higher the prices, but also I think the opportunities as well. Well, I think I can say that I've never seen Costa Ricans do so well, Michael.

I think, you know, this is my perspective, of course, but there is it's, you know, as they say here, hay plata en el calle. There's money in the street. You just need to know how to pick it up.

And a lot of the businesses, tours, transport companies and even hotel owners are from Costa Rica as well. So. We had here, just to be clear, you believe Costa Rica tourists can increase from nine hundred and sixty thousand to three percent by 20.

No, the nine sixty seven was just for quarter one there, Dave. So really, it's going from like two point four, two point four, seven million. I think it was in 2023, basically all the way up, you know, to Costa Rica, saying five million.

I mean, going from last year's two point four, seven million tourists to five million is a bit of a jump. I think we're going to be closer to three point five, maybe four million. So are you talking about multi unit buildings or several freestanding buildings?

More, I would say several freestanding buildings. But just because, again, there aren't that many multiunit kind of buildings on that front. Is it difficult to find high quality property management, Steve?

Yes, at point at times it is. You just need to know who basically to really use in that one. And we're more than happy to kind of give you some direction on that because we have quite a few, few of them.

We know friends that own them and also clients that have used them and have had good experiences, others that have had bad. Daniel says here, are there any signs of municipalities getting more efficient or trying to provide better infrastructure for tourism, water, for example? I mean, I kind of say tongue in cheek there, Danny, of like not really.

I mean, I think that a lot of people need to understand here is that a lot of this infrastructure work, the development has to happen before the infrastructure work comes in. These municipalities are not sitting on tons of money. They get this money from taxes, taxes, property taxes, a point to five percent in Costa Rica.

You know, we also have luxury home tax as well. A lot of people don't even file for that. The municipalities are not are not even looking at it either and going around and looking at homes.

So there's a lot of work that can be done there for water. Daniel gets a little bit more complicated because of SATAs, which are locally run water associations compared to the government level and just the infrastructure required and the money that they have. These SATAs don't have the money, so they have to wait for big developers to come in, basically, or smaller developers to pay for that infrastructure work.

So, I mean, we've seen a little bit of increased efficiencies, but I wouldn't say that it's been a major change there. Josh says here, where do you see development moving urban school in the next two years? I'm going to answer that in a minute, Josh.

And that's a great seway into Costa Rica location rental data there, guys. Sorry, that was a lot of questions and a lot of responses in a short period of time. So overall rental listings kind of growth here in Costa Rica, guys.

So what we're looking at here, basically, is just the number of listings on Airbnb. OK, we get a lot of our data from AirDNA, but we have to go in and clean a lot of it. It's so dirty, guys.

It's unbelievable. So we have to go in, download it, run a bunch of macros to actually clean that data up, tons of replicas, et cetera, just so that you're aware of what we get here. And we have access to every vacation rental in Costa Rica, a little bit different than maybe some of you guys view on AirDNA.

We actually have the back end of it there. But I think what you're seeing here, here, guys, it's just an exponential growth in the number of listings in Costa Rica. You know, 2023 saw growth of 27 percent there.

You know, 2024 so far, guys, this is so far seen a 22 percent increase. So I think we're going to continue to see probably around a 30 percent increase here this year. And this is definitely going to slow down as we start to see markets fall down, which we're starting to see here, guys.

You know, I've never seen so many price reductions. I think a lot of those price reductions were people that were maybe just drunk and throwing prices and seeing, you know, what was hitting on the wall there. But also the cost of construction is increasing as well, guys.

I mean, you know, two years ago we had an exchange rate of 680, nearly 700. Today, you know, it's 500, sub 500. So, you know, when you project that out, that's a 30 percent increase in the cost of construction here.

We're building all over Costa Rica. What I've started to do, guys, it is actually more affordable sometimes to buy stuff abroad and import it and pay the taxes than it is to buy things here. So any time that we've been able to do that in dollars, we've just been doing that.

So we just don't have that currency risk there in any of our projects. Like for steel, we'll buy directly from Guatemala and import it rather than paying for it, you know, in colones. So we have that.

That's the overall kind of rental listings growth here in Costa Rica that you've seen. When we start to see that listings growth by locations, this is a lot of data, guys. And remember that I'll share this with you.

I basically here have really ordered this by growth, which is, I suppose, the fourth column here. San Jose seeing a lot of growth, but a lot of that's coming from the towers. If any of you have seen the skyline of San Jose, you'd have seen that change basically over the past couple of years.

We also see here Puerto Viejo, Cahuita seeing huge change there as well. And you'll see even more data later on for Puerto Viejo and Cahuita and a case to be made for investment there as well. Paco, towers, guys, again, anywhere that they're able to build towers and condominiums is just going to grow much quicker because they can add 150, 250 rooms by clicking their fingers by putting that tower up rather than having to build kind of more, you know, more organic developments or, I suppose, horizontal condominiums rather than vertical condominiums, as we call them here.

But I think that there's some potential, guys, in areas here. So I want you to take a look at the bottom section here of looking at, you know, Junquial, Negra, La Fortuna, Samara, Monteverde. Chachagua is by Arenal, just outside Arenal for anyone.

But just looking at those areas, not as a percentage growth, but also as their numbers growth, because I think you're going to see here is that some of those lower end where we haven't seen as much growth in numbers, maybe percent, but not in numbers, are going to come up when we start looking at the location data. So now I'm going to look here, guys, at locations, as we did before with listings growth in locations, but this is occupancy in locations. Okay, guys, this is for really condos and villas only just so that you're aware.

Interesting thing here is you'd expect Manuel Antonio, you'd expect Nosada. I don't think tons of people would expect Monteverde. I don't think, you know, you'd have expected Tamarindo.

I don't know whether you would have expected Samara there, guys. You know, Santa Teresa, Malpais, Grande, of course, San Jose is doing well, La Fortuna, great, Chachagua, which is right there as well. Just there are a few things coming up there.

So there's going to be a tendency or there's going to be a trend here, which you guys are going to start to see here. You know, we've seen Monteverde and Aranau and Samara in these other listing locations. We've seen it here now in occupancy.

But when we now move to average daily rates in these areas, you won't see them. Okay. And, you know, I'll get to that a little bit of why I think that's happening.

But when you look at average daily rates here, I mean, Papagayo, as you guys know, which is basically the four seasons, is like, yeah, we all know that. But its occupancy is not that high either. I think it's in the 40s.

but it's up here in the 2425. Nosara, of course, Las Catalinas, Potrero, Tamarindo, Grande, and Jaco. Jaco is brought up by basically Los Sueños guys there, the luxury homes that are there.

There are some luxury beachfront homes in Jaco as well, not huge amounts of them. But I think this data kind of just, you were like, yeah, I mean, this makes sense. This kind of, you know, it's pretty intuitive.

Yeah, we don't agree. We'd agree with that. You know, what you need to now kind of take a look at when looking at this data is just the cost to enter these areas.

Usually when it's high ADR, the real estate costs are high. Papagayo, just a lot is, you know, $2 million. Nosara, a million dollars for a lot.

Las Catalinas, you know, I mean, million dollar homes there. Tamarindo, there is still some opportunity in Tamarindo, and I'll get to that later, guys. As there is, I still think in Grande, you know, Flamingo basically saw a lot of, you know, speculation on that area.

It's just the higher the ADR, of course, the more expensive the real estate, because the market is more mature. What I'm always looking for are those markets that aren't so mature and that are up and coming. And that's where we kind of put all this data together, you know, sometimes.

And what we're looking at here is taking occupancy and the average daily rate and multiplying them together just to see is, you know, kind of how it shakes out there and if there is any movement. And really, there's not much difference there. HACO, of course, dropped, guys, because its occupancy is a little bit lower.

Its ADR was higher. But Papagayo continues to do really well. Nosara as well, Las Catalinas, Tamarindo, Flamingo, Mamon Antonio, which are the core destinations there.

So, you know, these are very mature destinations. But then you can start to look at some of the lower stuff, the up and coming stuff. Puerto Carrillo, which is near Samaraguay, Portolón, Matapalo, which is between Dominical and Mamon Antonio.

And also, I mean, you've got Punta Leone there, but I think that's more of a local market. And then also Puncial and also Lake Negra there. I think that the data should be able to give you a bit of a direction.

But I also think that, like, you need to use your intuition a little bit. Difficult for some people to do when they're not here in Costa Rica or they don't understand the market or the whole country. You might understand one market, but you don't understand how that market basically has perspective against other markets here in Costa Rica.

And that's kind of really what we do is, you know, we take a look at this data and we're able to put perspective on certain markets here. So now, you know, I'd mentioned that we'd look at location data from an Airbnb, VRBO point of view. Now I want to take a look at search data, which I like to look at, which is, again, Google search data, which is kind of more intent.

Like it's people searching stuff online on Google, basically. What we did was we looked at search terms over the last 12 months in Costa Rica and kind of group them together. OK, by location.

OK, so and there's some big shockers in this one. And again, you're going to start to see multiple locations repeating themselves on this. So these are the average search terms per month.

The column on the left basically wasn't long enough to put it together. So I kind of split it up into two. But look how Aranau is outstripping Tamarindo here on search terms, guys.

And that's stuff like Aranau hotels, just the term Aranau, La Fortuna, La Fortuna tours, you know, vacation rentals, everything just way outstripping Tamarindo. And also Monteverde there, guys. Like I was not expecting Aranau and Monteverde to be in the top five.

I really wasn't. I wasn't expecting Salmona to be in the top 10 and definitely not Rio Celeste either as well, guys. You know, so it's just interesting when you look at this data because you need to take this data.

This is kind of more intent. This is more like tourism intent, whereas the vacation rental data is kind of people have stayed there. You know, it's kind of maturing destination.

So what I'm saying here is you kind of need to start to put stuff together here. And like, as I like to call it, kind of the investment magic. So, you know, this is where magic happens in Costa Rica, in my opinion, guys.

And this is what we look at. It's in high demand areas where, you know, there's good rental data. Potentially there's good search data, you know.

And also is I'm going to throw we always look at tourism in the hotels, mid to luxury hotel section. Why? Because really is destinations don't happen until really there's hotels there.

Why? Because they bring the tourists in or the investors in for places to stay. People like it.

They get a feeling. There's a sense of community. And then from there, the real estate kind of builds out and you can take a look at whether you want to look at Las Catalinas, whether you want to look at the Four Seasons, whether you want to look at Reserva Conchao, Pena, Los Sueños, etc.

Even Tulamar in Manuel Antonio, like these were tourist destinations with hotels that bought people in and that drove up the price of that real estate. So I'm always looking at mid to luxury hotels in certain areas, as it's my belief that tourism dictates where real estate and investment value is, guys. And then also cross or relate that with where real estate is affordable.

Take Nosada. It has great rental data. It has good search data.

It has mid to luxury hotels, probably. And it's real estate, unfortunately, is just not affordable. You can get into that market.

But that market is a mature market, guys. So where do I think some magic's happening at the moment, guys, based on just some of the data that we've got? And also my gut.

I don't always shoot from the hip, even though sometimes it may appear. But I like La Fortunera now. Why?

High search data, guys, online, meaning the intent is there. It's got affordable real estate. And there's a lot of land around there.

And there are high-end hotels there. There are hotels that are getting just as good nightly rates as there are at the beach, if not better, and better occupancy than at the beach in the La Fortunera area. Also, another one, Monteverde, as you guys saw there, high search data again.

It has affordable real estate. It doesn't have luxury hotels, but has mid-level hotels. I mean, we've seen Monteverde Lodge.

We've seen Sender come in this year there and just upgrade. And they continue to upgrade. I mean, I'm speaking to Hans, who manages Sender the other day.

And it's been incredible, the rise of their average daily rates there. And also Monteverde just has great occupancy as well. Another one, which is a bit of a derp, is Tamarindo.

It has high search data, guys. I believe the value in Tamarindo is finding affordable land or older homes and remodeling rather than buying something that's existing so that you're not paying pure market value. It has mid- to higher-end hotels there, guys, and just great occupancy as well.

Another one, Puerto Viejo Cahuita. I personally am not a huge fan of it from an investment point of view. I love going to it.

I'm sure a case can be made for it. It has high search data. There is affordable real estate.

There are mid-level hotels, lower to mid-level hotels. It's not quite there, the solid occupancy. I just am always going, how does it connect with a trip to Costa Rica?

There is a way to do it, but it's just not easy. It's not easy to connect. I do love it from a point of view of great food, great vibes.

It's just not in my, I would say, investment sphere at this particular moment in time. And finally, Samara keeps coming up as well, guys, as you've seen on all here. That's high search data.

It's got quite affordable real estate. There aren't that many, I would say, even mid-level hotels in that area. So you just need to bear that in mind.

Carrillo, the beach over, I think does, has Nambu, I think it's called, which are the owners of El Establo. But it just has good occupancy and people seem to enjoy going there. So this is just five of areas based on the data and just, I would say, my gut that I like for investment.

And here are just two examples, guys. On the left, 567 square meter bit of land in Arenal with Volcano View with water in kind of a very small development that you could buy for $65,000. You could put a home on it, prefab home, build a home.

And based on our numbers, you could get a return of 15% on top of that. The other one on the right here is actually in Langosta in Punta San Francisco, which has a high-end development with multimillion-dollar beachfront homes there. We did the numbers here on a five-bedroom home.

A total investment of $1.3 million. Homes in that area are selling at $1.8 million. And it's your choice what you do.

You can rent it and get an annual return of 14%. Or if you wanted to, you could sell it and make basically a close to 30% return on that. And these are just two guys that we go through whenever we're doing analysis of investments here in Costa Rica.

We're always looking for stuff. And we actually do the investments ourselves, meaning that we make the pudding that we also dictate our clients and investors to basically make their investments. We also do investments here in Costa Rica as well.

So OK, there is one more slide. But before that, I'm going to get to the Q&A here because we've got some questions. Those are poor occupancy returns, said Michael.

I think it just depends. You have to look at occupancy versus the average daily rate there. So it's really you have to kind of combine all those things together and find comps and do analysis.

So it's not easy to do. And that's why we do what it is that we do. Johnny says there, you've mentioned your past, the podcast, the experiences rental market being the most lucrative and vacation rental market.

Can you provide any comparison to cap expenditures versus additional multi-unit rental? Multi-unit rentals, I mean, that's a good question. I think I'd need to explore that a little bit more on that one, Johnny, to give you an idea.

You know, the multi-unit rentals, the advantage of it is that you're just kind of it's kind of a sunk cost when you when you go into when you when you buy land, meaning that you could put four to six apartments on there compared to a luxury home. I think it's just then I always looking at it from an exit and resale point of view, meaning that like if I buy a piece of land and I build six apartments on there, unless I'm going to go to condo law, the next guy needs to want to have six apartments, whereas as a vacation home, you know, I can sell just the one vacation home rather than buying six apartments. And I think Costa Rica is more of a lifestyle investment, which a vacation home is rather than six apartments, which is kind of more of like a ones and zeros investment here.

But I think what you'd find is on the cap rates, you know, probably on apartments can do very well. They can do just as well as vacation homes, guys, as well, sometimes even better. It just depends, again, on location, how much you pay for the land and also construction costs there as well.

Again, good question there from Johnny. Unfortunately, Johnny, I don't have the data at hand there, but nothing more than our analysts like than to analyze data. So President Candid Figueroa talked about making Costa Rica into the new Singapore.

I don't see that. I mean, I really don't. Costa Rica, unfortunately, is a high tax authority, guys, unlike Singapore, you know, which kind of has an offshore jurisdiction, you know, it's offshore, basically.

Costa Rica, unfortunately, from a tax perspective, is not a one of the most beneficial, I would say, countries to do business in. But I think, yeah, I think that that probably died with this candidacy, unfortunately, there, Max. Michael here says Monteverde has minimal infrastructure.

It does, but it also has an asphalt road. A lot of people are going to it as well. And it's also maybe an easier drive from Guanacaste than also driving to Arenal as well.

And I think we're starting to see that, but also Arenal is getting busy. So I think a lot of that is, you know, flooding over to Monteverde. Hey, when you invest in Costa Rica, would you set up a company or how does that work, Camille?

Good question. I'm going to let Paola basically answer that one because that kind of goes over to her part of the project. Mario Jose, how about investment opportunity in Dominicao or Rocha Uvita?

Yeah, definitely Uvita came up on it. Dominicao has good returns as well. Dominicao, I think it's just because there's not tons available in that area.

I think there's one group that owns the majority of the beachfront land and all the way up the mountain there. I know because they've offered to me multiple different times. Ojochao is more residential.

I think there is opportunity in Ojochao, guys, for something that is a little bit more luxurious for sure. Again, just need to take a look at the data there. I managed vacation rentals in Utah, Hawaii for 18 years.

Do you know any for sale where I could add value? Yeah, definitely, Max. If you want to, afterwards, you can get in contact with us.

We'll send an email. We know quite a few, I would say, vacation rentals here. I actually had a friend who owned one of Hawaii's largest vacation rentals there, Jeff, for many, many years and sold it to, I think, a HomeAway competitor.

Dave says here, are you referring to apartment buildings for long-term, i.e., annual rentals to locals? Are you referring to apartment units rented to tourists? I think really your returns are going to be more towards tourists, of course, Dave.

I think that there is an opportunity for locals. I've always thought about buying something on the exterior areas. Instead of being in Santa Teresa, being up in Corbin area or over in Cabuya, instead of being in Tamarindo, being out in Villarreal, there is a demand for that for locals long-term and also for expats long-term as well.

But I was referring it to more towards tourists. But again, tourists are going to want more key areas, whereas I think locals and more annual rentals are going to want more a little bit further out than the tourist town. If anyone's tried to get into Tamarindo during a busy period of year, you'll definitely know what I'm on about.

Do good surf destinations get better ADR and higher occupancy? Daniel Hernandez. Intypical, yes.

I mean, if you look at all the main locations, usually they are surf destinations, Santa Teresa, Nosada, Tamarindo for sure. Michael says also possibly interested in purchasing a vacation. Michael, great.

We'll send a follow-up email there. I know we've got a couple of other questions there, guys. I'm just going to wait there and again, I will see some of these questions here, answer them at the end, just so that I don't take up all the time here and that we also give a break here to Paola.

Paola, did you want to present this or did you want me to click?

[Poala Retana]
Well, if you want to click so we don't change it, I'll be fine with that if you're okay.

[Richard Bexon]
Sure. Last thing before I let you go, Paola, this was actually a global property guide here. I'll share this over, guys.

Basically, they analyze 300 properties in Europe, Latin America, and the Caribbean and here are the countries with the highest net rental yields. I'm sure you'd be very interested to see this, guys, and we will share it after in the presentation as well. I just don't want to take up huge amounts of time.

But in summary, Costa Rica is there four times in the top 10, guys, just so that you're aware of rental properties, okay? Cool. I will do my best to click, Paola.

[Poala Retana]
Thank you. Well, thank you, everybody. I'm going to answer Camille's question shortly, but before getting into is it better to invest in a corporation or under a personal name, I just wanted to give you a brief overview of how can you own property in Costa Rica or what type of properties we have in Costa Rica.

So in general terms speaking, we have two type of properties, fee simple properties, which refer to title land, basically. This is the type of property that most like the most common type of property. It's similar to what is used in other countries with a positive particularity that we have a public registry.

This is important because all title lands are registered in a public registry and any transactions that you do in a title land are recorded in a public registry. So anytime an asset is transferred, mortgage, or in any way, you know, encumbered, it is recorded in the public registry and it's available in a property title. Basically, subject to any conditions, you know, imposed by law or any restrictions that are created directly in the property title.

Holding this type of property gives owners the ability or absolute rights to own, to transfer, to lease, to modify, to develop. The other type of properties that we have are concessions, which is basically beachfront properties. These are not considered a fee simple properties.

This is kind of like a lease from the Costa Rican government, which are awarded by municipalities and local entities like the Costa Rican Tourism Board. This is what we know as maritime zone land. So beachfront properties are divided into two portions.

The first 50 meters are public. They're accessible to anybody and they cannot be owned by private individuals. And these are the first 50 meters counting from the high tide, right?

So the first 50 meters are public. After that, the next 150 meters, so in order to own or purchase a property that is beachfront after the 50 meters, they're what we call concession land. This is basically what we know as a lease, right?

So it's not owning, it's leasing, but you have the ability to develop subject to certain regulations. With, you know, basically, except for this special regime of concessions, foreign citizens do not have any restrictions to own or hold property in Costa Rica. So they have the same rights as local citizens to own it or not.

So being a foreign citizen is not an impossibility to own land. So it's not a requirement to hold a corporation. Any citizen of any country can own a property here in Costa Rica.

So the question about either is it a good idea to incorporate or to hold property under your personal name is basically a question of when, how, and what do you want to do with your property, right? I think this is one of the biggest questions that we have every time somebody wants to, and I know we had it in the chat by Camille, but this is one of the biggest questions we'll have when we're discussing a property purchase or acquisitions here in Costa Rica, right? And the answer is not straightforward.

It always has to be evaluated on a case-by-case basis. I put some examples here, and I think we can click them all, Richard, if you want. But basically, and maybe to give you a little bit of background here, traditionally, before we used to have a corporation, people used to have the habit, I would say, to create a corporation for anything.

So if you had a car, I would own it in a corporation. If you had five properties, you would have an individual corporation for each property. Now, increasing compliance requirements regarding incorporation of corporations, recent taxes that have been applied to corporations has made this decision not very habitual now.

And since there are no restrictions to own land as a foreign citizen, you don't have to do a corporation. So I think the question here is basically, are you going to be living in Costa Rica? You know, holding a property in your personal name is an easy way to prove that you have an investor here and access to the possibility of having an investment visa.

Also, if you're not living here, having a corporation may facilitate the day-to-day management of your investment. This is also important for closing procedures. If you're not going to be here, having a corporation might facilitate all of the closing, the purchase, everything that you need to do in order to actually own the property and title it to the name of your corporation or of your investment.

I think privacy is also one of the considerations that some of our clients take into account. You know, since we have a public registry, anything that is, you know, anybody that owns a property you are able to do a search in the public registry. You know, I can search Richard Beckson, he has a property in Costa Rica and it will show up.

So privacy is a big thing for some people, not for everybody. And this is why this is always on a case-by-case basis, right? Corporations are, and I will explain that in the next slides, but corporations, you don't know who the owners are, you know, who the representatives are, but you don't know who the corporation are.

So if privacy is important, I think this is one of the considerations. And then one of the biggest considerations in legal terms is separation of liability, right? Basically, if you have or own asset or investment in a property, it's going to be separated from your personal assets.

So it depends on what you want to do. I will say as a general rule in order to consider if you want to have a corporation or hold a property under your personal name, think about are you living in Costa Rica or will you be handling all of your affairs personally? Will you own several properties that will require you to separate liabilities?

And I think also how important it is to keep your ownership private as well. So the question after that, after you make the decision of either to hold property under your personal name or under a corporation is what type of company, right? In Costa Rica, we have two common types of companies, which is basically anonymous corporations or SAs and limited liability companies.

SAs are a little bit more complicated, but the differences are very slight. Both companies offer its partners the benefit of limited liability and private, right, they're not public, the owners are not made public. Both companies must be incorporated by at least two partners, but later you can change and only one person can be the owner of each.

Both companies are allowed to create branches, both companies are allowed to hold properties and then the differences are the corporation or the SA is governed by a board of directors, which requires at least three members and it also requires a controller. So you need at least four people to be sitting in the operation of the corporation, right? Limited liability companies only require one manager, you can have more than one, but one is the minimum.

And then I would say the biggest difference between these two is the participation of their partners. So the participation of partners in corporations are represented by stock, which are considered to be securities and you may transfer them by endorsement, you may also have different types of partners, so you can have the regular partnership or special partners, depending on if they're going to contribute only in certain issues. So it's a little bit, I would say this is for different, I mean, for transactions that requires some level of sophistication.

In cases of limited liability companies, partnerships are represented by shares, which are transferred only by endorsement. And you must give your partners a right of first refusal. So this is more like for holding personal investments, I would say.

At the end of the day, the decision to choose a legal structure will depend on the size of your business, the number of partners you have and the level of involvement you want in each and the complexity of your management needs. One thing that I want to mention, two things that I think are important in these considerations. One is that you can always change.

So if you start with setting up a business in Costa Rica, with a limited liability company, because you thought you were going to do something small, and then eventually your business starts growing and you want to incorporate additional partners, or you want to include a more, you know, compliance corporate structures, you can always change from one to another. So at the end of the day, this is an important decision to be made and it's important to be advised well since the beginning, but it's not fixed. It's not like you have to dissolve the corporation if your business grows, which I think is something important.

And then the other important point that I wanted to mention is, both companies are equally subject to taxation. So there's no difference in taxation depending on the structure of the corporation that you choose. The difference in the taxation comes from the economic activity itself, but not from the form of the corporation.

However, there's a point that I also want to make here, which is something that we do consider every time that we're dealing with foreign investors, particularly for U.S. citizens. We have a lot of clients that are from the United States. Choosing one or the other does have implications in the U.S. So we always like to work with, you know, our clients, accountants, local accountants to determine what is the best structure or the best corporation that they need, the best company that they need. Most U.S. citizens usually opt for a SRL, which is a limited liability company, because it gives them the chance to check the box or float through in terms of their tax reporting. So I think this is something important. This is also an important consideration when you're thinking about incorporating or holding under your personal name.

How is your investment in Costa Rica? If you're a foreign investor, how is your investment in Costa Rica going to affect your tax reporting and your tax compliance in your home country? You want to make sure that you're not paying double taxes or missing something there.

So I think it's very important that you work with a local accountant from your home country if you're a foreign investor.

[Richard Bexon]
Hello, we have some questions here from the audience.

[Poala Retana]
Yes, of course. Let me see.

[Richard Bexon]
Nick is asking, could public registry be accessed online or does one need to go in person?

[Poala Retana]
You can access it online. You need to create a username and a password. But if you have an email, basically anybody that has an email can create a password, access it online.

It's pretty self-conducive, I would say. Like it's easy to use by yourself. You would see it's divided by section.

So you can go to the property section or the vehicle section and you may check if there are any properties. So yeah.

[Richard Bexon]
Cool. Yeah, I think that's the Registro Nacional. You can go in there and it's like consultas gratuitas and there you can take a look.

Krista Salas says here, just so that I'm clear, if you purchase a property under a company, does that exclude you as an individual to participate in the programs to obtain citizenship by investment? I think it's residents first and then become citizenship, but how's that working at the moment?

[Poala Retana]
Yeah, I think that's a very important question. It doesn't mean holding a property under a corporation does not exclude you from opting for residence as an investor. It just makes the process a little bit more complicated.

So we had a change in the regulations before. You could just evidence to immigration authorities that you were owner of a share that has a property and they would take that as your investment. Now, it's a little bit more complicated.

We need to work with accountants to make sure that your investment is capitalized in the shares of any company that holds a property. So it's not that it excludes you, but it just makes the process a little bit difficult. So I would say if you're initially considering just buying a property to live here in Costa Rica and it's for family purposes or maybe for rental, but it's kind of an easy structure, maybe it makes sense if you want to apply for residency.

So you don't have ongoing high costs of applying for your residency. But in summary, no, it doesn't exclude you. It just makes the process a little bit more complicated.

[Richard Bexon]
Emil asks here, can the SAA be owned by a company in the EU?

[Poala Retana]
Yes, both SAAs and SRLs may be owned by a company in the EU or in any other foreign company. We don't have any restrictions for holding shares. Again, who will own your company, I guess depends on your needs.

And we always have this conversation with our clients. Has to be evaluated on a case by case basis, but it depends on if you have a holding company abroad, if you have a trust state or some form of planning vehicle abroad, that's also important, or personal ownership. So yeah, anybody, either a physical or legal person, foreign can own shares in both of these corporations, these companies.

[Richard Bexon]
Cool, let's continue with the presentation here.

[Poala Retana]
Okay, so how do real estate?

Speaker 1]
Transaction works and I think we're, I'm going to speed up this, this part a little bit because it's, uh, I know we don't have a lot of time, but in general terms, the first step is always, you know, if somebody finds a property that they like, make sure you have a, you start negotiating with the seller, typically it's done through a, an agent or somebody that is helping you with your investment. Uh, but the important of a, of a letter of intent or offer letter is to secure the price in general terms and conditions as quickly as possible, especially in hot markets, the next would be the signature of a purchase agreement, which basically gives you the terms and conditions of how your purchase will come along. For example, if you need to put your, uh, deposit, typically sales here of purchases of properties require or purchases of property require a deposit and initial deposit to make, to show or evidence the seller that you have a real intentions of buying typically is refundable, but that's something that is important.

So include all of the conditions there, then this is always a, something that we do, I would like to say in most nowadays, I would like to say in all of our transactions, to be honest, uh, we work with a, with an escrow agreement with an escrow company. We sign an escrow agreement. This is important.

So they hold the funds for the transaction. So we do it first. So we make sure that we are able to undergo due diligence of the property.

And then second, to make sure that the seller will actually receive the price at the time of executing the purchase agreement. So having an escrow agreement and escrow company and choosing a good escrow company to work with is important because we have, uh, anti-monetary laundering regulations, and we can discuss that in another, in another webinar, but, uh, the due diligence period is very important also to make sure that you're reviewing, uh, the conditions of the property that you're purchasing, if it is suitable for the type of investment that you want to do. So not all properties are equal and not all investments are equal. Uh, and this is also very important because we don't have title insurance in Costa Rica.

So we want to make sure that we undergo through this process, communicate the due diligence result, and then, um, a finally the closing, which is the signing signature of the transferring deeds. Um, I think the next slide is, I just wanted to give you a brief overview. We always have this question, how expensive it is to buy a, um, a property in Costa Rica or invest in Costa Rica, who pays for these costs?

This is how it's typically done, but everything, well, some are mandatory, like capital gains tax. Um, but sometimes like real estate commissions or closing expenses can be shared between the seller and the buyer. This is how it typically, it typically goes.

But I think from a seller perspective, you always have to, uh, consider capital gains tax after, uh, every time you sell a property and the real estate commission and from the buyer's perspective, the closest closing expenses, which is like, I would say somewhere around four, 4%, uh, plus another fees for due diligence. Um, and then consider ongoing costs of having a property taxes. I think Richard mentioned home luxury taxes at some point during the webinar.

So, um, I think I can answer questions about that if we have, and I just, I know we have only four minutes, so I don't know if we want to go a little bit longer, if everyone doesn't want to, if everybody's available. Um, these are the most frequently asked questions we get from our clients. It's interesting because these are, these are frequent, like, should I incorporate is something that we get from our clients if we are, even if they are local investors or foreign investors.

Right. Um, I think the main question from foreign investors is, is it safe to purchase here or to invest in Costa Rica? And I think my answer is always yes.

If you are working with the right people, um, eh, do I need an attorney? Yes, because you, again, you need to undergo through due diligence, but what is more important is I know you need a public notary to record any transaction that you're doing a over title land, which is something that you must always consider. Can you transfer frauds from above?

But broad, yes, eh, we do that through the escrow agents. And now it's, I would say pretty simple, but it's important to know that you do have to evidence the source of your funds. Uh, where are they coming from in order to comply with money laundering?

If the money is coming into Costa Rica, not all transactions require money coming into Costa Rica. And then do I have to be in Costa Rica to execute a purchase of a property? No, you can do it through a corporation.

If you incorporate one, or you can do it through a special power of attorney that requires certain formalities, but you don't have to be physically present. It's ideal. Of course you want to know what you're investing in, but if for some reason you cannot be present in closing, it always can be a reach.

And then I think this was a question that somebody also made in the Q and a, and I don't know if you want to compliment, because I'm sure you'll have a little bit more data regarding this. I would say, yes, you can finance the, your investment in Costa Rica. There are, you know, before there were more restrictions.

I think now we're starting to see more of this. I would say from also a lot of movement from private lenders, which are looking to place their investor money in this against a mortgage, for example, local banks are supposedly getting into the market, but they have so many compliance requirements and in general, like requirements in general that I would say local banks are usually not the best option to go. It takes time.

If you're looking in a hot market, it doesn't have enough time to, you know, to secure the financing before the purchase. So what I always tell my clients is if you will depend on financing for your investment in Costa Rica, make sure you get ahead of the curve and start looking into this as soon as you're, you know, looking into properties, because it might take even longer to secure the financing than to purchase. And I don't know if you wanted to add something regarding that, because I know the question that people had in the chat.

[Poala Retana]
Yeah. Typically, you know, I mean, if we do a closing where financing is involved with a Costa Rican bank, usually we're going to be putting 60 day closing or 90, you know, we can put due diligence 30 days just so that, you know, they're aware, but it's always risky, you know, just because there could be a chance that you don't get it. And, you know, if you've gone past the due diligence date, your deposit goes hard, you know, so you just need to structure it very, very carefully.

I mean, we're always very protective over our clients who end up working with us and just make sure that it's structured, that at any moment they're not losing any money. But I think that the the thing to bear in mind here is when you start looking at, you know, basically your returns, you also have to look at the interest rate that you're paying as well, which can be from banks from like nine, nine and a half percent, all the way up to private investors doing 18, 20, you know, and the numbers just start, they don't start to make sense there when in North America, you know, you can get, you know, rates at five, six percent. I mean, I know those numbers have been going up, but, you know, it's sometimes I always say to clients, look, if you have a property in the US and you can take a HELOC loan out from 10 to 15 years at a low interest rate, and I say low compared to nine to 20 percent, it makes financially more sense to do that than do it with a bank down here in Costa Rica. So.

Cool, what a great summary there, Paola, thank you. We've got some QA, we've got some QA here. How long is the lease good for the beachfront property?

So for concessions here, how long is the lease for?

[Richard Bexon]
Yeah, it we've seen different types of of of terms. The lease period is usually 20 years. Yeah, 20 years, I would say is the is the lease period.

I've seen some I mean, before they were granted for more years. But I think right now we're seeing lease period for for 20 years.

[Poala Retana]
OK, and if I'm correct, I mean, there's also we have titled beachfront as well. There's just a confused stuff a little bit more, but there's not that much of it.

[Richard Bexon]
Yeah, there are there I think there are two exceptions to this rule of the 200 meters, which is titled properties that were a properties that were titled when the law entered into effect, there was like a transition period. So there are some beachfront properties that are titled. They're not very easy to get your hands on because they're scarce.

But there are some. Yeah. There's also I think you we talked about how cool I don't think we talked about that in this, but these are city ports, which are also you may purchase title property there that is beachfront that is not subject to the maritime zone regulations.


[Poala Retana]
I love this. Does Costa Rica publish company financials for essays or SRLs? If so, when is that data published?

[Richard Bexon]
No, I'm not sure I'm understanding that question very well.

[Poala Retana]
I can answer this one. No, the financials for companies are not because they're private companies and not basically me. So they're not like as we have in the U.S., in the U.K. PLC is public limited companies. They're limited private limited companies.

[Richard Bexon]
Yes. No accounting and movement like internal finances of corporations are.

[Poala Retana]
Yeah. Steve says here, what is the typical loan to value in commercial properties? Steve, to be honest with you, I don't think banks like to loan on commercial properties if you're not a resident here in Costa Rica.

So it's very difficult to do that. I mean, I would say if you're coming from the U.S. want to do commercial, you have to find a way to structure it as residential. And then if you want to do commercial, that's up to you.

But the bank is not going to touch commercial stuff. Yeah. Anything else?

[Richard Bexon]
That sorry, I would say that private lenders also typically, I would say like like high loan to value opportunities. So I guess commercial loans require a higher I don't hire like higher evidence of their worth.

[Poala Retana]
Yeah, I mean, typical stuff is going to be about 60 percent loan to value that they're doing 50, 60 percent loan to value. Johnny says here, is it better to have a will or trust once the transaction is complete, taking in mind lawyers, fees and taxes?

[Richard Bexon]
I think I don't want to be this like a repetitive, I think this always is on a base on a case by case basis. You could say a will is easier to execute here in Costa Rica for your investment. You know, it's pretty straightforward.

It's done to a public notary. It's very regulated. It's registered in the National Archive.

But some people, depending on the structure that you that you decide or that you're using to holding your corporation, you might want to use a trust depending on the requirements or the conditions of the you know, the how you're going to distribute your assets or how you want your assets to distribute. If you want to, you know, give some restrictions or limitations, a trust is probably a better option. But again, this is I think in terms of costs, I would say a will is is a little bit less expensive than trust, because you also have to pay like maintenance fees for trust.

[Poala Retana]
So Edgar says, what happens after the 20 years with a concession? Can it be renewed?

[Richard Bexon]
Yes, concessions can can be renewed, can be renewed.

[Poala Retana]
They can be when would they not be renewed? Because I think that's a lot of the fear that people have, like, OK. And I think people just need to understand the majority of luxury beachfront hotels here are in concessions.

So like it's like it's not normal. But I mean, at the end of the 20 years, like what does it automatically get renewed? Does like do they ever get canceled?

[Richard Bexon]
It's not automatic, I think, to answer this question. And this is like maritime zone regulations and concessions, I think, are a good webinar subject because they have a lot of materials. Things that I think are important is a concession is not something that you just go and request and say, I want this.

Give me this concession. You have to go through a process and and, you know, apply for the concession, have development development programs, evidence what you're going to do there and make sure you're upkeeping with this, that you're also paying your, you know, concession fees up to date. So if you have a if you have an investment or if you plan to do an investment in a concession and you get and you're authorized the concession, you present all of your development plans and everything and you leave your concession there and you don't do anything with it.

I think there could be a possibility that it's not renewed. Right. Because you're not using it correctly.

But if you're giving it the correct use, if you're complying with the constructions there with the permits, you know, obtaining the permits, paying your canon and all of the paying your dues. I think it's it's it's renewable and you're subject to. It's not automatic and it has to be applied.

I think at least six months in advance before it expires. So it's important when you have a concession to be moving your file, to making sure that everything is up like up to date and upkept.

[Poala Retana]
I think the thing that people need to understand is the municipalities want you to have an active concession because then they can get the tax, the taxes, the canons. So like it's not they want to cancel it at all. Like you just need to kind of just work within the framework of the zoning that you have on it.

[Richard Bexon]
It's actually and if done correctly, concessions are a safe investment.

[Poala Retana]
Peter here asks about what about permissives that all source against concessions like I mean, that's a whole I think we could go down. Yeah.

[Richard Bexon]
Yeah. Again, I actually think this could be a very interesting topic for a for a webinar. So concessions require municipalities in order to obtain a concession.

You read the municipalities have to have a zoning plan in place. Not all municipalities, of course, like of Costa Rica, have zoning plans in place. So permissives they use are kind of like a figure that municipalities have come up like have authorized.

And again, this will depend on each municipality. You need to really check the regulation. So I'm like maybe getting giving out too much information because this is very specific.

But permissive also will allow you to, you know, you have connect services and build some structures, but it's not it's not as, you know, safe as a concession. It's not registered. It's not approved.

It's just a permit that you get. It's like a precarious permit that you get to live in your property.

[Poala Retana]
Yeah. I mean, and again, the lifetime of it can be different. I mean, I was looking at one in Vita the other day that was every year.

And I was like, wait, that's really scary, because like every year you have to apply for the permissive also because it was in Osa. And yeah, I just was like, that's way too much risk.

[Richard Bexon]

[Poala Retana]
So Camille says here, how do you normally work? You take care of the whole process. Can you participate partly?

How long does it take to build a bungalow in Masalmenos? Well, Camille, I think how we work again, we'll email you after this. You're more than happy to kind of meet with us and chat with us.

But yeah, we do take care of the whole process for you. And also, how long does it take to build a bungalow? Wow.

Depending on the size of it, Camille. I mean, it can take anywhere from, you know, for the whole permitting design phase, let's say 12 months up to 18 months, depending on the size of it and how complicated it is. Chris asks here, how much money is held in escrow?

Are they held in colones or are they held in dollars and so that they don't have that currency risk?

[Richard Bexon]
Yeah, that is the money is held in escrow for the duration of the transaction. I would say the first the first portion of the money is held in escrow I would say typically seven to 10 days after you execute the offer letter or a purchase agreement. And it will stay there until closing.

So how long it will be will depend on what like your due diligence period may mainly. If you set a short due diligence period, like 30 days, then you you need like probably a week or so for closing. Some people need a little bit more again, depending on if you have financing.

I would say average 30 to 60 days, maybe Richard.

[Poala Retana]
I don't know if you agree with me, but I think probably around about 30 days. I mean, look, it's 10% held as an escrow. And then usually a couple of weeks later, you know, probably I would say, you know, usually we have due diligence here be about 30 days and then closing kind of a week after that, just so we can prep.

So that remaining 90% literally goes into the account, then you close a couple of days later. So it's not 100% financing.

[Richard Bexon]
Yeah, the purchase price is held only for like two days unless the purchase is delayed for some reason. But it's not very typical. Usually the funds arrive like one or two days before closing.

[Poala Retana]
Camille says here, how busy are you now? How long is the waiting line to build? Many thanks for this webinar.

I say Camille, always busy. But just again, reach out to us after if you want to the podcast. We're more than happy to chat with you.

Edgar asks, which banks are easier to transfer escrow deposits? Big banks, Chase, Bank of America, Amex, etc. You want to answer that one or you want me to do that one, Paola?

[Richard Bexon]
Well, I don't think maybe you want to answer it because from my perspective, I don't see a lot of difference, but maybe you have more experience in that. I think the escrow company is more important.

[Poala Retana]
Yeah, the escrow company is. And I mean, look, there is escrow companies like TLA up in Texas, which is very easy to use, meaning that sometimes for US buyers or Canadian buyers, it's easier. And especially if the seller doesn't want the funds up, well, doesn't need the funds to come down to Costa Rica and just stay within the US ecosystem.

But if it's coming here again to Costa Rica, it doesn't make any difference of which bank it's used. We're on the same page. Cool.

Daniel, I don't know if you still have your hands up there. You had your hands up. If you just allow you to talk here, Daniel, and ask your question.

If not, if you did have a question, if not, don't worry.

[Richard Bexon]
I don't know. I think there was a question about opportunity for commercial real estate investments. Maybe I saw that one, but I don't know if it covered.

[Poala Retana]
Yeah, I think there's opportunity. Like, again, I love this Costa Rican saying, there's money in the street, guys. This is a developing currency country where there is a lot of opportunity all over the place.

More money is flowing in here. You saw the data there for every $1 GDP, $13 are flying in through the door from investment here. So, yeah.

Daniel, you have, I think you had your hand up there. Did you want to say anything?

[Richard Bexon]
Maybe they did it earlier on.

[Poala Retana]
Mati has a question here. So I'm going to allow him to talk. Good afternoon or good evening.

My question was that how easy it is to open a bank account for a corporation in Costa Rica? I've had success recently, Paola, with public banks.

[Richard Bexon]
Yeah, I was going to say that. I'm now working more. Before, I used to recommend private banks, and now I'm working more with public banks, even sometimes without an appointment.

You take the requirements and you go. If it's a recently formed corporation, it's pretty, I would say now, pretty simple. This used to be a big, how do you call this?

A stone in your foot? Is that a word? A stone in your shoe, yeah.

But I think banks are interested in getting more clients. They know we have a lot of foreign investment coming into the country, so I think they're flexibilizing. For me, maybe now the opening of the bank account is not such a big hassle, as in how much money or what are you going to be transferring into the country?

That's where I think you have the hassle. So opening a bank account for paying services like water, electricity, utilities, employees, fees, day-to-day activities, I think it's pretty simple. Then if you want to make international transactions over certain amounts, that's where it starts to maybe get a little bit more complicated.

[Poala Retana]
Yeah, just to reinforce that, exactly. I mean, Banco Costa Rica, Banco SNL have been very easy for a lot of our clients to open up accounts. The private ones are actually a little bit more of a pain in the butt.

The public ones are a lot easier. I mean, you do, if you're going to open up with a corporation, have to have cash flow and get an accountant involved to produce that stuff. And also a lawyer, it would end up costing a couple of hundred bucks, but I think it's worth it to have the corporation.

As Paola says there, once the funds get sent in, the bank is going to want a lot of documents knowing where did that funds come from, potentially tax returns. It's going to want sometimes bank reference letters, copies of your IDs, yeah.

[Richard Bexon]
Yeah, and then this is something, if you were planning on having an operative corporation or company, it's a good idea to do it at the beginning. Opening it as soon as you set up the corporation and that way you can, with a cash flow and you can avoid not having to do all of this.

[Poala Retana]
Cool, Edgar's actually here. Could you provide the link to the online registry? Yeah, I'm more than happy to here.

Basically it looks like this when you go to it and then you can just sign in here. I'm right in saying this, right Paola? For the online registry.

[Richard Bexon]
Yes, yes, yes.

[Poala Retana]
And then you can go to consultas gratuitas here and then basically here you can for names, planners, all that kind of stuff. There's a bunch of different stuff in here. So, but I will type the answer here for you anyway.

Let me just grab this for you for the national registry. And everyone can have a copy of it. Any other questions guys before we say goodbye?

I don't think anything more chats coming on here. I think we've answered everyone's questions. I'll just wait a 30 seconds here and if nothing else comes up, as my grandmother would say, love you and leave you.

So, yeah. Okay, I don't think, well, Max is coming here with a question. Let's allow Max to talk.

Hi guys. Richard, was that Jeff Sorensen that you mentioned from Hawaii? No, it's Jeff Brazola, Max.

Oh, okay. Different Jeff. I know a Jeff that does vacation rentals in Hawaii.

No, this was many years ago. I think he sold his company probably about 10 years ago to one of the big guys. So, yeah.

Yeah, I'll be in touch. I'd like to chat offline here. Fantastic.

We always love to chat investing. Thanks, Richard. Thank you very much, Max.

Fantastic. Well, thank you very much guys. Actually, wait, sorry.

QA here, two came in. Dave said that was an outstanding, objective, informative presentation. You're very welcome.

Maria said, gracias. Excellent webinar. Both of you are really clear.

Thank you. I know it was a lot of information in a very short period of time here guys. Again, we'll send out the copy of the webinar that we have here as well, just that you guys have a copy of it.

And this is also recorded, so we'll put it online. But anything you guys need in the future, we're more than happy to help out. And Edgar says, where can we learn more about you, Richard and Paola?

I mean, you can go to LinkedIn. We're both there. But also as you can just reach out to us, our contact details will be in the email after here as well guys, for anything you need.

Okay. Yes, and feel free to reach out.

[Richard Bexon]
It was a pleasure.

[Poala Retana]
Thanks very much, guys.

[Richard Bexon]
Thank you so much, Richard.

[Poala Retana]
See you later.

[Richard Bexon]
Well, bye. Bye.

Let's Get in Touch!

Investment Manager and 20 yr Costa Rica Veteran Richard Bexon, alongside Investment and Real Estate Lawyer Paola Retana, present the data they look at when investing in Costa Rica and the costs and legal structures available to investors.

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