Costa Rica Info

[Joseph Beilke]

So Just spent 2 weeks in Costa Rica,  stayed in three different towns all on west cost.  All the AirBnB seemed to be owned by American's.  This area is not only become a very hot tourist spot but a place to retire and hide.  Who owner property down here, where are they, what type of property  and what are your numbers looking like?  Looking to get some down and dirty info before I even consider this.  Local agent swear it's the best thing that ever happened to Airbnb and Americans and European vacationers.  Prices seem very high and build times very long.  Any and all information is welcome.

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[Shiloh Lundahl]

@Joseph Beilke, @Michael Baum, @Mike Lambert, and @Ian Fortney, First off, I'd like to say that investing in the United States in general creates a better return than in Costa Rica.  However, sometimes investing is more than just the financial return.  And I would say that that is how it has been for me over the past year with my Airbnb's in Costa Rica.  We have 2 Airbnb's there.  One in the mountains and the other one in Playa Avellanas.  There was a learning curve about investing in Costa Rica and the costs associated with it and financing and everything else.  But now things are working more smoothly and after finalizing the accounting for last year, I have a better idea as to what kind of profit to expect.  So I will lay out the numbers here for you.

We bought a property in the mountains for 680k.  We bought it in cash with 9 investors for a total of 970k contributed.  Here are the numbers:

Income		Total
Partner Contributions
	Managing Partners Debt	$0.00
	Partners Deposits	$987,459.99
Total Contributions		$987,459.99
Operating Income
	Airbnb Income	$50,186.50
	Square Income (Vehicles or add-ons)	$6,741.04
Total Operating Income		$56,927.54
Total Income		$1,044,387.53
Expenses
Purchase of property
	Cost of House	-680,000.00
	Closing Costs	-$26,744.44
Total Cost of Purchase		-706,744.44
Set Up Expenses
	House Improvements & Care taker home addition	-116017.03
	Adding Tiny House	-52130.83
	Furnishings	-68403.65
	Vehicles	-43150
	Set Up Costs and Advertising	-2339.53
Total Cost of Set Up		-282,041.04
Operating expenses
	Care Takers	-14535.9
	Additional Cleaners	-1505
	Cleaning Supplies	-2670
	House Supplies	-1340
	Landscaping	-4230.66
	Utilities (Power & Water)	-8204
	Internet	-315
	Pest control/fumigacion	-120
	Pool cleaning/maintenance	-2220
	Vehicle Gas	-552.3
	Vehicle Maintenance and Repairs	-6625.01
	Welcome Food for Guests	-115
	Property Repairs	-4999.64
	Bank Fees	-1208.06
	Accounting Fees	-1085
	Insurance	-955.74
	Other Expenses	-1071.2
Total Operating Costs		-$51,752.51
Total Expenses		-$1,040,537.99
Net Income		$3,849.54
Net Operating Income		$5,175.03

Now 5k for an investment of 970k is not a good investment.  However, that was our first year and we really didn't even get it listed until March.  During the first 2 months of this year, the property has brought in 32k. Its current projections are to bring in between 150k and 180k with estimated costs of 60k.  So the profit form year 2 will likely be between 90k and 120k.  Again, not the highest cash on cash returns.  However, all of the investors really like the property and the care takers and they like to visit and bring family and friends to the property.  This is the real value of this particular asset.  

Our other property is on the beach at Playa Avellanas.

We bought this property in September of 2022.  We turned the 4 bedroom, 5 bathroom property into a 6 bedroom, 7 bathroom property, plus a caretaker's apartment.  Our total invested into this property is 1.14 million among 10 investors (this amount does include a 250k seller carry loan to be paid off by the 2 of the investors over 5 years).

This property was up and running starting December 15 and we have had it pretty booked since then.  This property is unique in that we can rent out the whole property or we can rent out the property by individual rooms because each room has its own bathroom and it runs as a bed and breakfast. This lessens the amount of total vacancy.  For the first 2 months of this year, this property has brought in 60k and it is estimated to bring in between 240k and 300k.  The expenses though are quite a bit higher since it is a bed and breakfast.  Expenses are estimated to be around 110k.  So the profit is estimated to be around 130k to 190k for an investment of 1.14 million which creates about a 12 - 17% cash on cash return.

Lastly, here is a pictures of the 3rd and final property that I will be buying with another 6 investors.  

 We are going to run it as another bed a breakfast - the same model as the other beach property.  This property is just off Lake Arenal with views of the volcano and is in the highest touristy area of Costa Rica.  I got the numbers from the previous owner who has been running it as an Airbnb.  It brought in 120k last year, but I think we can bring in much more as we do upgrades including adding an extra story on top and as we run it as a bed and breakfast.  I estimate that we will be able to bring in between 200k and 260k if we run it the same as the beach property.  The operating expenses costs will likely be between 90k and 110k per year.  We are buying this property for 650k with half down and half seller financing over 4 years at 8%.  This will be a 10 year play.  We will either bring on another investor each year to make the yearly payment or we will just forgo the income payments to the partners and make the yearly house payments out of the cash flow if we just want to keep the property with only 7 investors. This will build equity but won't have cash flow for the first 4 years.  Or we could just bring on another investor each year and our cash on cash return should also be around 12 - 17%.

In other words, in order to cash flow in Costa Rica you will probably need to invest in more creative ways. Let me know if you have any questions about this.