STR in Costa Rica Beaches

[Mike Petrosinelli]

Does anyone own or has thought about owning STRs in Costa Rica beach towns? I'm sure covid had a huge impact on 2020 revenue but seems like it could be viable. 

[Shiloh Lundahl]

@Mike Petrosinelli I am in contract to buy a property on the beach in Playa Junquillal.  It's a 7 bedroom 4 bathroom on 3/4 of an acre right on the beach.  It already has a guest house that we will use as a caregiver's home and we will be adding a pool, a gazebo, and 3 tiny houses.  We are super excited.  Our total invested will be the 1.3 million.  We will finance about 500k, and bring in 7 other investors at 100k each.  @Mike Lambert is correct in that I am telling my friends and investors to expect a 5% return but I will be shooting for a 10% return. It is more of a lifestyle investment. According to other Airbnb rental rates and occupancy (and based on my other STR in the mountains of Costa Rica) I am expecting to get about $500 a night for the main house and $100 a night for the tiny houses and I expect them to be filled half of the time on average throughout the year. So that would be about 12k a month in revenue or 144k a year in revenue. If I subtract about $4000 a month in overhead, including the care givers, the utilities and the upkeep, then that is $8000 a month in profit. $96,000/$1,300,000 = 7.4% return, not including the financing. There will be no return for myself or my business partner until we pay off the 500k loan that we are getting to finance the purchase. But over the next 5 years, that loan will be paid off and then we plan to get that 7.4% return.

One thing to keep in mind is that with the massive printing of money, we need to adjust our expectation of the value of money.  $1,000,000 may seem like a lot of money, but it really isn't any more.  It seems like if you were a millionaire 30 years ago you had a lot of money.  But today I would need about 5 million to have the same lifestyle that I would see millionaires have when I was a kid.  So if I can lock in the house price now and I can cash flow on an asset that I enjoy and want to keep for a very long time, then I am good with that.  Keep in mind that I am at a place where my business partners and I own over 200 properties and I recognize that my Costa Rica properties don't or won't produce as high of a return as my lease option properties or my rent by the room properties in Arizona and they don't get as much of a return as my lease option or rental properties in the Triad area (Greensboro, Winston-Salem, High Point) of North Carolina.  However, I am at a place where if I can purchase a property that I have on my vision board and I can put less that 25% down on the property, and it cash flows, and I can personally enjoy the use of it, then I will absolutely move forward in putting the deal together.