Getting Ready to buy our 2ND Property in COSTA RICA

[Shiloh Lundahl]

Hey everyone, 

As some of you may know, I purchased a property on a mountaintop in Costa Rica earlier this year that we rent on Airbnb.  It had a main house, a guest house, and we converted a shop into a grounds keeper's quarters.  Then we added a tiny house to the property which we just finished last month.  

We purchased this property in Costa Rica at a discount for $680,000.  We did a lot of work to the property and then we staged it and purchased a couple of vehicles to go with it.  Our total investment ended up being just over a million dollars.  Because I couldn't find any favorable financing options, I brought together 8 investors who wanted to own a nice property in Costa Rica that the investors could enjoy themselves, and that could also produce some cash flow.  

During the process of bringing people together, one of the partners, John (who creates treasure hunts for people in Utah, and who also has a fairly large social media following) posted about our property on his social media platforms and he got tons of direct messages of people asking him what he was doing.  He also got several people who told him that they wanted in on the next deal we did in Costa Rica - so I kept my eyes open for other potential deals on the beach.

Now, f you are an investor, then you have probably experienced that deals can seem scarce, but then all of a sudden, you find multiple deals in the same week.  And so it was with us.  After buying the mountaintop property, we found a beachfront property that we thought would be an awesome project.  We got it under contract and during the due diligence period, we found out that there was legal issues with the property and it was unsure when or how those issues would get resolved.  So rather than having our partners wait for some unknown period of time for things to get resolved, we ended up cancelling the contract.  But then, within a few days, our realtor sent us a great lead on another property in an even better area that was going to work perfectly for what we wanted to do.  

Now we are under contract and we close in 2 weeks on a 4 bedroom, 4 1/2 bathroom property 200 meters from Playa Avellanas in Guanacaste, Costa Rica.  It really is a perfect property for us.  We are buying it for $880,000 and this time we were able to get some mid-term financing.  We are brining in 6 investors at $110,000 each and we are going to carry a loan for $435,000.  My partner and I will be carrying the financing as our portion of the deal.  We are going to build a groundskeepers home and another rentable unit on the property, as well as splitting one room into 2 and adding another bathroom.  With permission of the prior owner, we have been allowed to list the property on Airbnb even before we sell it.  We already have over $11,000 in booking for December even before we own the property.  

Here are some pictures of the property:

We will renovate the property into be a 6 bedroom, 6 1/2 bathroom beach house compound that can sleep up to 27 people if needs be.  We project the property bringing in $15,000 a month in revenue.  Expenses are estimated to be about $3,000 a month.  So the 8 investors will split $12,000 a month among 10 shares or $1200 each investor.  My partner and I would each own 2 shares and we each need to pay down the loan by around $45,000 a year for 5 years.  The interest on the loan would be at 11%.  So each month, my principle partner and I will need to bring in around $2000 to pay the interest for the loan and an addition $45,000 a year to pay the loan down.  But we are willing to make those payments each year in order to not need to come out of pocket $220,000 each right now and to limit the investors to only 8 rather than 10.

The benefit to each investor is that they can use the property for a week each year for them selves. And the plan is to keep the property for 5 years and then either sell it, or pay out the investors. If investors in the deal wish to close on the deal and cash out, then they can sell their share to either the principle members or anyone in the group for 150% of their initial investment bringing their IRR to around 23% in 5 years.

One of the things that I will be doing to help pay my $45,000 loan payment a year is hosting investor masterminds and investor retreats where we pair learning about real estate with exploring Costa Rica and doing some awesome excursion.  

So, needless to say, I am super exited about our new property we are buying in Costa Rica.  Let me know if you have any questions about this deal or investing in Costa Rica in general and I'll do what I can to help answer them.  

Anyway, I hope you have a great day and good luck investing in real estate.