[00:00:02] Speaker A: This is short term rental management, the show that is all about short term rental property management with your host, yours truly, Luke Carl.
All right, we got Nick on today. It's a crazy show. I mean, this guy's story is nuts. And he's in Costa Rica.
I think he's in Minnesota, which makes me understand why he would want to go to Costa Rica, because Minnesota's cold, right? But Nick's an awesome dude. He's got a great story to tell. It's all over the place and takes a lot of twists and turns. And he's a professional property manager in Costa Rica, and we are happy to have him on this week's episode of short term rental management.
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All right, short term rental management. It is a glorious yet again Tuesday, and we're happy to have you here. Thanks for being with us on this wonderful morning. If that's when you happen to listen, if you're on time like I am, and I've got Nick today. Nick is, he's based primarily in Costa Rica and has a property management company, but has a lot of experience in Costa Rica rental real estate. So, Nick, tell us about yourself and how you got started.
[00:02:01] Speaker B: Well, thank you. First of all, I want to thank you for the opportunity. And this is wonderful. So thank you. Yes. So it all started almost 20 years ago. So a friend of mine had asked me, that guy I had known for years, said, you know, let's go down to Costa Rica and buy some land. And at the time I was doing some corporate, I was doing corporate strategy and marketing. That's my, my undergrad is from Cornell and my MBA is from Kelley School of Business at Indiana University. And I said, sure, what the heck, let's do it. Let's just for fun and have a passive income. We flew down and ended up buying about 750 acres of land, of which 70% was in the jungle and in the mountains. And it was absolutely beautiful. And that has that snowballed. We ran into a lot of issues with that. I'll tell you that's not as easy to develop real estate anywhere. But I can tell you in Costa Rica, especially when you're ahead on the environmental side, there's a lot of rules and dealing with a lot of partners, as I think a lot of your listeners understand, once you start bringing in a few partners, things can get a little challenging.
But we went from there. We started selling some lots, and we started a real estate company, then a brokerage company. We had three offices and about 15 agents out selling. And then the crisis of 2000, the late aughts, the 2000, it really hit Costa Rica about 2010, 2009 to 2010, and carried through 2013. And during that time, it allowed me to really start digging into numbers and things, and there's some irregularities. We ended up separating with my business partner and shutting down the brokerage firm, which was a great decision at that time. And at the same time, I built my first house, my house, and put it up on verbo in 2009 in Costa Rica. So. And that just started its own journey. And then when, when the partnership broke up, you know, I ended up with another 150 acres in a different location next door to a golf course, of which I've spent the last 15 years finalizing permits and designs and everything else. And we were getting ready to launch this year, end of year 2024. So that would be 175 home residential real estate development next door to a golf course in Costa Rica. But as of, you know, right now, day to day, at the same time, renting my house out from 2009, in about 20, 1819, I officially launched with Abigail Vargas, OsA Property Management. So we are a property management vacation rental company. We manage about 50 homes up and down the coast of Costa Rica. So if you're familiar, basically from Hako down south to Ojochao, that's just down the Pacific coast, southern Pacific coast. And we have owners from, you know, Belgium and France and the United States. And we have guests, as of last count, from about 24 countries this year. So we have about 30 employees and three offices. And those employees are part of a service company that I own also that handles all the cleaning and all the maintenance. And so that we spun that out for a couple of different reasons, but, yeah, so we stay very, very busy.
I love it. Right. It has its own challenges, as every property management company does, and dealing with owners that are around the world in different time zones and dealing with different laws, rules and labor laws and registration laws and increasing registration laws. As, again, everyone in the short term rental world is going through right now and trying to stay on the forefront of all of those.
[00:05:39] Speaker A: Okay, so remind me what year this was that you made this original trek?
[00:05:45] Speaker B: 2005. March 2005.
[00:05:48] Speaker A: And where did you live at that time?
[00:05:51] Speaker B: Minneapolis. But we. I was in Minneapolis, which is where I still spend about half my time. I am a permanent resident of Costa Rica, but for my kids are up in Minnesota, so we go back and forth. I go back and forth all the time, and my kids come down with me a couple times a year and I'm up here back and forth.
[00:06:08] Speaker A: So. Wait a minute, 2005, you're from Minnesota?
[00:06:11] Speaker B: Yes.
[00:06:11] Speaker A: And some friend of yours says, let's get on a plane and go buy real estate in Costa Rica.
[00:06:17] Speaker B: That's it.
[00:06:18] Speaker A: Had you ever been there?
[00:06:20] Speaker B: Nope.
I had been to about 20 countries at that time.
[00:06:25] Speaker A: I'm not unfamiliar with other countries.
[00:06:28] Speaker B: Right, no. And I love to travel, so I thought, I mean, it's on my list to visit anyway, so. And at the time, I had enough investments elsewhere. I had a couple condos here in the Twin Cities.
I was kind of tapped. Not tapped out. I just. I had some money that I was willing to go a little higher risk with. And that call came in at a perfect time. Yeah. Just flew down and said, let's figure this out.
[00:06:54] Speaker A: Man. And, no, no experience in real estate either.
[00:07:00] Speaker B: Just owning. Just owning investment property.
[00:07:02] Speaker A: Oh, you did have an investment or two at rental house?
[00:07:06] Speaker B: Yeah, yeah, we had some condos here in the twin cities with another.
A business partner who I'm still friends with. Yeah.
[00:07:12] Speaker A: And you were renting those long term.
[00:07:15] Speaker B: Yeah. College students. They were around the University of Minnesota.
[00:07:18] Speaker A: Okay. Okay.
[00:07:19] Speaker B: Yeah.
[00:07:20] Speaker A: So you get to Costa Rica. This sounds like a movie here. I mean, you get to Costa Rica. How old were you?
[00:07:27] Speaker B: I was. It's almost 20 years ago. I was just. I was 30. About 30, 31.
[00:07:33] Speaker A: So you get to Costa Rica, you get off the plane and you go poke around and you say, we're going to go buy 750 acres in Costa Rica?
[00:07:39] Speaker B: Yep. The guy that headed up the group said he'd been talking to a real estate agent and he's got this piece of property that, you know, we're going to go see. I said, great. Now bear in mind, no one in the group spoke a word of Spanish.
I knew some. So I was the most advanced. And I had taken Spanish, you know, 1213 years earlier in high school. So that was our extent of. And there were ten or eleven of us down there and all, you know, on these rental cars. And our real estate agent was from the United States, so we had that connection. But you know, at that time, Costa Rica was really, especially in our area, is really. It's the last area of Costa Rica to be developed. And at that time, I mean, we were. There was no bank within an hour and a half. I mean, we were still using travelers checks, when I think about it.
[00:08:25] Speaker A: Wait a minute. Looking back on it, was this realtor, like, sketchy or did know what they were talking about?
[00:08:31] Speaker B: No, he knew what he was talking about. He's still down there and he's still very successful. Oh, so, yeah, he was a pioneer. Really?
Yeah. Pretty interesting.
[00:08:40] Speaker A: Okay, so you buy the 750 acres. How much does this cost? This is. This is gold. I'm.
[00:08:45] Speaker B: Yeah.
[00:08:46] Speaker A: So fascinating. So how much did this 750 cost?
[00:08:50] Speaker B: Million dollars.
[00:08:51] Speaker A: A million dollars. And you went in on this with how many other dudes?
[00:08:54] Speaker B: About ten there.
[00:08:56] Speaker A: About people?
[00:08:57] Speaker B: Yeah, yeah. They're all guys, but, yeah, guys. And I knew half of them, you know. So again, imagine that then, quickly, and.
[00:09:04] Speaker A: This guy puts in a hundred. Or financing.
[00:09:08] Speaker B: No, no, there's no financing in Costa Rica. So it's.
[00:09:11] Speaker A: Does a guy at 30 years old get the hundred grand? Where did you get you the hundred grand? He had a job.
[00:09:16] Speaker B: I was successful with my career and my other investments.
[00:09:20] Speaker A: So no significant other or children on the horizon at this point?
[00:09:26] Speaker B: I had just gotten married. Okay.
[00:09:29] Speaker A: She didn't think that this was a wild, wacky idea.
[00:09:32] Speaker B: She thought it was a horrible idea.
[00:09:34] Speaker A: Okay. Okay. I would expect, you know what?
[00:09:36] Speaker B: And with that said, so did you know my father was a very successful corporate. He was chief operating officer at Land O Lakes for 20 years. So he was very corporate. And, you know, when I went down there and I sent the money down, he, and I quote, like, you are effing crazy. Don't do that.
[00:09:56] Speaker A: But here's my thing.
[00:09:57] Speaker B: I'm.
[00:09:57] Speaker A: Okay when dad thinks it's crazy, but when wifey or future wifey thinks it's crazy, then it's time to maybe slow down.
[00:10:05] Speaker B: Right?
[00:10:06] Speaker A: Everything I've ever done, it's an ex.
[00:10:07] Speaker B: Wife now, if that means anything.
[00:10:09] Speaker A: Oh, well, then. Well, now we're getting some juice. All right. Okay.
So we did go down.
We did made it. Did this become successful, the 750 acres? Were you able to make it work in some capacity?
[00:10:23] Speaker B: We cash flowed it enough to where we thought we were on a roll, and we sold some lots. We were starting to get some money back. And then, of course, then that's where you start learning. Now, remember this area of Costa Rica, pretty much up and down the coast at that time where we were in the mountains had no electricity, had no water.
It had a four by four, four wheel drive access only. That's still true today. So we had to pay the engineers. We had to get an engineering study. We had. We had to put in 2 electricity. I mean, this is really, really developing land.
[00:11:02] Speaker A: So you were basically. You were banking this on out of state investors wanting to buy here for vacation purposes.
[00:11:09] Speaker B: Yep. Second home retirement.
[00:11:12] Speaker A: Vacation rentals.
[00:11:14] Speaker B: Vacation rentals. I mean, you know, looking back when we were so naive and stupid, really, but it turned out to where that project was kind of a stepping stone to where, because that project did not make money at the end of the day, we lost. Right. But at the same point, you know, that was 22,005 and 2006, we bought another 150 acres, which is the 150 acre.
[00:11:41] Speaker A: Wait a minute. Hold on. I'm not ready for that yet. So let's go back to the 750.
[00:11:45] Speaker B: Yeah.
[00:11:45] Speaker A: The plan was originally to maybe build on it and sell those, or just. Just subdivide it and get.
[00:11:51] Speaker B: Subdivide? Yeah, subdivide. Put lots on there.
[00:11:54] Speaker A: From day one, you were never going to build.
[00:11:57] Speaker B: Correct.
[00:11:57] Speaker A: Okay. And so you did start to sell some houses, and then you made some insinuation that it was started to go awry there. What happened?
[00:12:07] Speaker B: Yeah. So it turned out we did get some bad advice from some lawyers. We got some bad advice from local lawyers, local lawyers, local surveyors, and disagreement amongst lawyers, which one turned out to be 100% correct. And the other issue that took place very early on, there were ten people, and kind of the dynamics that you just asked about, like other people or spouses questioning things. So some of the other spouses started getting on, you know, not real thrilled with the investment.
So right away, I mean, within the first four months, five months, we had an investor say, I want back. You know, I want my money back. And so we actually had sold a lot. We honored that. But, you know, suddenly that. That. That or group of ten starts breaking apart right away.
And what happened was the person that invited me down again, a guy I knew for years at the time, started making unilateral decisions and not sharing those decisions that were being made until myself and a couple other people started asking around of, like, what happened to that lot? Why is that sold? And then a house was being built, and I said, we don't even have a record of that lot being sold. Oh, well, that was a gift to a guy who's gonna build a house? I mean, just decisions that weren't even allowed in the corporate structure and the books we had. But he was living full time in Costa Rica and had legal authority to do so. Right. I mean, he had the legal right to do that, but it wasn't good for a partnership, so.
[00:13:45] Speaker A: So wait a minute. It sounds to me like he was selling lots without you knowing about it.
[00:13:49] Speaker B: Yeah, that's exactly what happened.
[00:13:50] Speaker A: Oh, my goodness. How much did a lot go for?
[00:13:54] Speaker B: Between 75 and 150,000.
[00:13:57] Speaker A: Woof. Oh, my goodness. Okay, so how did this story end, this 750? Did you. Did it. Did you exit? Did everybody exit? How did. What happened?
[00:14:06] Speaker B: Bankrupted it out. It's still around. I mean, there's still, there's, there's homes that are built up there now. I don't own anything anymore. My shares, I gave. My shares are gone. I don't want anything to do with that.
[00:14:16] Speaker A: Did you. You ate that hundred granddaddy?
[00:14:19] Speaker B: Yep.
[00:14:20] Speaker A: You just said, I'm out, and keep. I don't want anything to do with this.
[00:14:23] Speaker B: Yeah, it was starting to get. You put. You put a bunch. Well, at the time. Then there was again another major decision was made to build a bunch of condos on a piece of property that no one had agreed to. But anyway, they started to get built, and again, a couple of the other partners ended up with free condos. And then there was threats of lawsuits and all of this, and I. And missing money or misappropriated money, I'll call it to keep it, but complete misappropriation of money. And as we started to investigate during the financial crisis, right, then the financial crisis hits. And that just was a super emotional, super charged time as people who have invested and trusted the guy who was heading this up. And as a shareholder of the whole project, we didn't know what was going on. We couldn't get a straight answer. And then it became.
We had board meetings. Right. Then you'd have a shareholder meeting, and at one point it was 52%, 48%. There were like two groups, two factions. So at that point, it's just. That's a disaster. Right. And that's the challenge of bringing. And that was the other challenge, right? The head of the group started, partially not at the time. We had 1010 shareholders all about. It wasn't a straight 10%, but it was about 10% per shareholder. Well, as we bought other shareholders back, right when they wanted out, then he started, this other guy started selling off 1%, 2% owners. So suddenly it becomes this big group of people and it was really challenging, and it became an extremely stressful situation and something I'll never do again. Right. I just was too naive and lack of controls. So I guess any advice would be make sure your controls are in place, make sure there's accountability, make sure it's very clear who can do what. And the minute, not at the minute, the New York second. Something isn't right. Doesn't feel right. You know, you gotta call out your partners on that because it was one of those things. This was a legacy, friendship, where it was somebody that I knew for a long time. So I thought, well, he's not, you know, this can't be true, right? And you kind of. You can start lying to yourself, then you start digging in. And it became a scenario where I called a lawyer about it and he said, yeah, we could, you know, costa rican lawyer. Like, we can definitely go that it's going to be a quarter million dollars, and what do you hope to get on the backside?
[00:16:50] Speaker A: So it sounds like this guy who was your friend ended up moving there and basically taking advantage of the situation and making moves that other people back in the states didn't really know about.
[00:17:01] Speaker B: Correct.
[00:17:02] Speaker A: Oh, my goodness. Wow. Well, great learning experience. You went to. You spent 100 grand on some school, right?
[00:17:08] Speaker B: I did, yes. Yes.
[00:17:10] Speaker A: Which it sounds like you're familiar with spending money on school with such an education, so.
[00:17:15] Speaker B: Well, this was. This was the real world. Like, it's. It's, you know, this is the real world education that. The stuff they don't teach you about.
[00:17:22] Speaker A: And so what happens next after the 750?
[00:17:26] Speaker B: So this was part of the complexity, right? So the first year, year and a half was smooth sailing, right? Selling lots, cash flowing. So we ended up buying another 150 acres in 2000. Who's we?
The same guy and I. Instead of the ten, there's just two of us. Now.
[00:17:45] Speaker A: Wait a minute. The same guy that moved down there. Sketchy.
[00:17:49] Speaker B: But again, the first year wasn't. At that point, the first year was fine. Okay, so then the next year, we go by another. We buy 150 acre track of land closer to the beach.
[00:18:01] Speaker A: How much was that?
[00:18:02] Speaker B: A million.
[00:18:04] Speaker A: And it's 50 50?
[00:18:05] Speaker B: No, we ended up going to people we knew, friends and family. Right. And just saying, this is another project we're working on.
Same thing we had. I want to say eight or nine, maybe ten investors at the time. So what we did with that product, this was a pretty interesting concept. We did. I would. I'm still a fan of it, but I would modify it a little bit. What we decided to attract investors. We said, look, we're buying this land. It's a million dollars. This is our expected, you know, we need to pay. We're obviously going to have expenses and the lawyers and all that stuff to start and then to get it going, and surveyors and whatever. So what we said was, we will sell as we sell property and we collect revenue, we'll give 100% of that back to our shareholders for the first million. So everybody's made whole. Then we start getting our cut. So we weren't doing straight 10% that time. We were selling shares for a price. I don't remember the price. Like $40,000 for 1%. We thought the payout would be the time, I think 10 million or, no, 5 million. I'd have to go back. But again, this almost 20 years ago. But what we said was, look, as we sell property, you're going to get your. You get all of your money first, even before us. So that's the guarantee that we're going to get this done. We want to get it done quickly. So same thing that starts going really well, that's in 2006. In 2007, we end up buying 250 acres next door to the 150 acres.
And.
[00:19:34] Speaker A: Wait, at what point did this, this go sketchy with the original and you lost 100 grand? That hadn't happened yet.
[00:19:40] Speaker B: That hadn't happened yet.
It was during the time we bought this third piece together.
[00:19:46] Speaker A: Okay.
[00:19:46] Speaker B: And we had brought in. We're putting in a gut, we want to put in a golf course. Or he did. So I said, I don't anything about that, but okay. So he, at that point, he went out to an investor group he knew, started raising money, and then that's when things started going a little sideways. Was during this, there was a golf course project, and I was like, you know what? You know, as anyone who's built a golf course, the ongoing costs are really expensive. I said, I want out. At the same point, the financial crisis was starting to hit. So we're talking 2000. This would have been around 2008 or nine. My first child's born in 2008. My son's born in 2010. I mean, so there's a lot of family stress, family situation, the world's collapsing. And at the same time, I'm starting to notice these irregularities. So I start pulling out and I start saying, look, I don't want to be a part of this project. I don't want to be a part of this one. You. And at the time, we had the real estate company, we had. We had bought and built a real estate office, a physical office.
[00:20:47] Speaker A: And you started a brokerage down there?
[00:20:49] Speaker B: Uh huh. Yeah.
[00:20:50] Speaker A: You were selling, so you were basically brokeraging the lots yourselves.
[00:20:54] Speaker B: Correct. And then we would broker other, you know, just a general brokerage firm.
[00:20:58] Speaker A: And you were doing, you were selling properties to international people, like all the time. Just say, hey, call me up if you want to buy a vacation house in Costa Rica.
[00:21:08] Speaker B: Yes. I mean, at the time, it was just crazy. Up until 2007. I mean, up until 2000, really, ape and 2007, people would walk into our office and say, you know, I've got $400,000 to spend and I leave in two days. I need, I need to buy something. Okay.
[00:21:26] Speaker A: Kind of sounds like 2021, doesn't it?
[00:21:29] Speaker B: Right. Well, there was, there was another real estate agent that we had a good relationship with. When potential clients would come into his office and they say, I want to buy, he'd say, all right, we're going to put a $5,000 charge in the credit card right now. And if you don't want to agree to that, then just walk out the door, because in another hour, someone's coming in to buy something. I mean, it was wild, wild west.
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wow. Wow.
[00:22:20] Speaker B: Yeah.
[00:22:20] Speaker A: Which we did see a little of that in 2021, 2020, right?
[00:22:24] Speaker B: Yeah, yeah, yeah. I mean, we were, we don't, I don't even touch real estate sales, brokerage sales at all right now. So. But yes, I saw, I was watching. And obviously, in Costa Rica, we've still see it. There's still been a big run up. It's just now starting to cool off. I mean, as we start managing properties. Yeah, it's been a five year run. It's unbelievable. Four year run.
[00:22:46] Speaker A: But you're not seeing the bottom drop out like you did in the zero nine.
[00:22:50] Speaker B: No, no.
[00:22:52] Speaker A: Things are pretty healthy and smooth there.
[00:22:54] Speaker B: Yeah. I mean, look, there's no financing. So what happened was the reason why the collapse, the collapse did happen in Costa Rica, it was just delayed. And the reason for that is the owners that had their second home or third home in Costa Rica as the crisis is hitting their first home, whether that's primarily United States or Canada, it was like they were just holding off, saying, it's not going to get any worse in the United States. When things started to collapse and mortgages had to get reset and all of that other business and the economy collapsing or people losing their jobs. Then it all hit at once. And people started saying, I need cash. I need cash flow. So I'm going to sell my property in Costa Rica. I'm going to sell my house. I'm going to. And it's as if it all hit within a six month period. And I mean, prices collapsed 60%, 70% through 2013.
And then they started, and then they've been coming up since. But the big run. The big run has been since COVID.
[00:23:59] Speaker A: And you're not seeing any. Anything resembling what that was like today because things are definitely a little slower now, aren't they?
[00:24:06] Speaker B: Well, I think, yeah, they're slower in terms of transaction time, but that's only price. I mean, I think the prices potentially will pull back a bit. In Costa Rica, it's quality, right? The quality stuff is always going to be of a high value. Right.
Proximity to beach, incredible ocean views. There is a global market for that. Those homes always hold their value better than an average three bedroom in the mountains with, okay, ocean views. Like, those are the ones that are more susceptible to big swings up or down. So there was a big swing up. I think, you know, as we look at the property management side of things, it's, you know, we're looking for properties that have uniqueness of some sort. That's. And that's a change in our. In our strategy. Just because of all the construction that's taken place. Supply has gone up in Costa Rica a lot across the country. So if there's going to be any slowdown, we would expect to see that. The problem is there's no MLs in Costa Rica. They set. There's. There's one that set up Rebecca clower out of Guadalcasse. She's. She's been part of a group that set that up. But again, that's not by law, it's not mandated. And as of now, there's still very little traction.
It's been something that's been planned for 20 years, since I've been going to Costa Rica, but, you know, that has to have some sort of teeth into it, and it doesn't have it yet.
[00:25:28] Speaker A: Okay, fascinating. All right, so the golf course. Back to the golf course that disappeared. Is he still doing that?
[00:25:36] Speaker B: No, he's out. I mean, there was a warrant for his arrest for a while, so, yeah.
[00:25:39] Speaker A: I was gonna say, like, where's this guy now?
[00:25:42] Speaker B: Florida.
[00:25:43] Speaker A: Oh, okay. That's where I am.
[00:25:46] Speaker B: Well, be careful.
[00:25:47] Speaker A: Arrest for what? Fraud or something?
[00:25:50] Speaker B: As I understand. Yes. It wasn't I wasn't involved with that case.
[00:25:53] Speaker A: All right, well, you got out. You got 100% out. And then.
And then what? So you did. You.
[00:26:00] Speaker B: So when we broke everything, we broke up like we basically did, you know, we did a business breakup. I said, you take this, you take that. I'm gonna take this. And so what I got was his shares of 150 acre development during the crisis. Then we started buying out our shareholders because we had ongoing costs. I mean, anyone with the development raw land knows there's still costs beyond taxes, right? We still had maintenance costs, we still have engineering. We were designing it, planning out 150 acres. That takes a lot of roads, planning and all sorts of stuff. And so by that time, all of our shareholders had been made whole.
We had sold enough lots on that 150 acre project to make everybody whole. But we had never done a cash call, and we were funding it ourselves by we. It's my father and I. And so we went to the shareholders and said, look, we can either cash call you or buy you out. So we bought out all the shareholders. And so now my brother and I own 96% of it. And then a Costa Rican, our project manager, has the other 4%. So that way they're skin in the game for the project manager, also for budgets and everything else. So after all of that, I have 150 acres. This is right around 2009 and ten. My house is built on verbo. And we're just kind of waiting for everything to calm down a bit in terms of a business relationship. Shareholders. We ended up buying the last shareholder out, like, in 2015. I mean, it took a time. It took a while for us just to say, to get kind of work through all of that.
And then when I took over that 150 acres, there were some challenges we had to do with changes of laws for developments, you know, road widths, things like that. All these things that we had planned out and paid an engineer for, suddenly we had a redo.
And that's when I took over that project, officially took it over in 2010.
The first thing I did was my project manager said, go get this property resurveyed. It's 150 acres. It's a lot. And by the third pin, the surveyor said, this entire property is off. Like your previous survey was off by about 3 meters, like 10ft. It had been tilted. It was all. So we had to resurvey everything.
So again, lesson learned. It took us. It took us, or took me, I should say, a solid five years to find a team that is reliable.
Yeah.
[00:28:31] Speaker A: So let's fast forward. You started this property. Did you fall in love with Costa Rica at some point? Was that fair to say?
[00:28:38] Speaker B: Right away, I mean, right away. I mean, it was. It reminded me so. I've spent some time as a student and working in Australia, and it reminded me of the jungles of Australia. Right. Just really, really kind of raw, super friendly people. Like, really friendly people. And right away, I mean, it was just right away, so. And, you know, the pura vida spirit, right. Pura vida is like the australian, no worries. And pura vira is a greeting. It's a. It's a. When you say goodbye to somebody, it's good morning, pura vira. It means pure life. And it's. It's really the spirit, which is, you know, as Americans, we push. We're constantly pushing. I want more. This needs to be done faster. This border vida, it's not. You're not going to change a culture. So I like that. Now, it's had some challenges initially when you start running businesses, but again, that gets into hiring and hiring the right people, which we do now, but the people, the wildlife. Right. I mean, 5% of the world's known plants, animal species is found in one national park.
I mean, it's crazy. It's the size of West Virginia. So you have this concentrate. About 25% of the country is protected. So you have this small country super concentrated with wildlife. And there's more. There's more. There's more bird species in Costa Rica than the United States and Canada combined. So if you're a birder, it's a great place to go.
And so. And it has more microclimates than the United States and Canada combined. I, because it's got the Pacific Ocean, the Atlantic Ocean. It has 13,000 foot mountains, it's got dry savannah, jungles.
[00:30:16] Speaker A: Hold on. This. You use this pitch on prospective clients as well, right?
[00:30:20] Speaker B: Like, come on down. That's what I'd say.
[00:30:24] Speaker A: Right.
[00:30:24] Speaker B: Once they're down there, they get it.
[00:30:25] Speaker A: Yeah, you get it. Okay. So then at some point, you said, listen, there is money to be made here. I do want to. I want to invest my life here. Oh, you got the host pulling mug. Nice.
[00:30:35] Speaker B: Oh, yeah.
[00:30:36] Speaker A: And. And so you said, let's go ahead and do the property management side of things. I guess, honestly, that's probably the next logical step to take here. So when did that all come about?
[00:30:44] Speaker B: The property management was, like I said, in 2009, I was managing the property. We had built a couple homes on this 150 acres.
Three or two, I guess there's several. Three. So I was managing four homes and on spreadsheets and saying, I know there's a market for this. I know there's a market.
I can't find the right again. Remember, I'm flying back and forth, so I can't find the right team or the right people, because even on my own house, you need a repair, you pay somebody to fix it, you show up a month later, hasn't been done. They've said it's been done. I mean, it's just the lack of accountability.
And so I was actually in a meeting for my development, 150 acres. As water is critical in Costa Rica, for us, it's water mitigation. But the water supply, again, fine land, raw land. In Costa Rica, we had no water, no electricity for any of the tracks of land we bought. So you have to go and build water systems and get permission, because in Costa Rica, you also do not own any of the natural resources. So if you find gold in your property, the government owns that. So whether it's gold or water, the government owns that. And you need to go through a whole process that takes years. They get access to that water. Now, in our case, we actually didn't even have water pipes running to the property. So we need to find the water and we need to get pipes. And that involves a local water board. So I was at the local water board in a meeting, and Abigail Vargas was there. And this meeting is all in Spanish. And I had a. I didn't understand a word or trying to translate it. My project manager and my lawyer speak English, but we couldn't think of it. Abigail Vargas was the secretary at the water board, the asada, it's called. And she translated this war or phrase. And I said, oh, there's somebody else here that might be able to help me on the property manager. So, again, I'm still using spreadsheets, and I'm stuck at four houses. So I said, I went to pay my bill. Then once I said, I need to talk to you about an idea I have. And so she lived near the project. She lived near these four houses. And, I mean, there's a whole story of that, but I said, look, I need somebody in country to help me out. And at the same point, she. She had always had a dream of running a home cleaning business.
So I said, well, look, I've got some houses that need cleaning. Maybe. Maybe we can help each other out. So that's how we started OSa property management. And it started where she was still working at the waterboard. So we would have to do check ins at noon or after she got off work. At the time when she first started, she didn't have a driver's license, so we were paying for taxis. I mean, she was cleaning houses. She was bringing family members to clean houses. You know, showing up late to work when a client arrives late for a noon check in. I mean, this was absolutely, looking back, very, very funny. But it was always challenging and enjoyable.
[00:33:40] Speaker A: Wow. Okay, man. So the property management company started what year?
[00:33:48] Speaker B: We would officially say 2019.
[00:33:50] Speaker A: Okay. And now you have, what, 50 units?
[00:33:52] Speaker B: Yep.
[00:33:53] Speaker A: Okay, let's talk about that. So, first question, how you sourcing clients? Are they buying them with an agent friend of yours and then they come to you, or do they already own them or. All the above.
[00:34:04] Speaker B: All the above. We have a couple agents that have been very, very good to us. We have some agents that don't like us, and there's a reason for that, which is we do home inspections as well, and we give the honest truth, and real estate agents know that, and they don't want our honest truth until their agent has purchased the property. So, you know, our most extreme example was when a guest walk into our office, or a homeowner and walk into our office, said, we've got a house. Our real estate agent says it's ready to go.
And Abigail Vargas, my head of operations, just went and take a look at it and said, oh, my God, there's something with the electrical. Long story short is $50,000 worth of electrical work that needed to be done that a $500 inspection would have discovered very, very quickly. So, for us, we source clients through our trusted real estate agents that we know and respect.
And a lot of times, it's online.
Our offices are important. You know, our best. Our best homeowners, actually are ones who have done it themselves, try to do it themselves first, or have gone with another company. So, you know.
[00:35:11] Speaker A: And were you self managing yours from Minnesota?
[00:35:14] Speaker B: Yep. And no issues all the time. I mean, you know, no more issues.
The hostfully thing. Right. The double booking at Christmas, but no more before hostelry. Yeah, when I was using spreadsheets, and then that's when I said, oh, my gosh, like, there has to be something better. So it was orbit rental at the time. I've been with them for years, so. Yeah, but. But, so I. Then that was, you know, the introduction to a PM's, which I just googled it and I didn't.
[00:35:42] Speaker A: But it was no more difficult than if this house were to have been in North Carolina. Right.
[00:35:48] Speaker B: For sure. That's right. I mean, I can't drive to it, so.
[00:35:51] Speaker A: Right, okay, got it. Okay. All right, so 50 units. Let's talk about the inner workings of the management company right now. You, what management software are you using?
You do like it?
[00:36:03] Speaker B: Love it.
[00:36:04] Speaker A: Love it.
[00:36:04] Speaker B: Absolutely love it.
[00:36:05] Speaker A: What do you love about it?
[00:36:08] Speaker B: The interface, the simplicity, the service. The customer service is fantastic.
I've gotten to know David Jacoby and Margo, like, the two CEO's.
[00:36:19] Speaker A: And Margo's been on. David Margo's been on the show. She's great.
[00:36:22] Speaker B: Okay. Yeah, yeah.
So both of them have. Excuse me. Both of them have rented from us. So David Jacoby was really, really the reason why we are where we are today. So he actually came down, he called me on. This is several years ago, three years ago, I think three, four years. Three years ago. And said, hey, we were supposed to go to Chile with my family, but my son's passport is going to expire. They won't let him in. He's called me from the San Francisco airport.
He sent me a text, call me urgent. I thought, oh, my gosh, something's going on with hostfully. Like, I just didn't. And I didn't know David that well at the time, but I called, he said, can we go to Costa Rica? I said, yes. I said, when he goes tomorrow? I said, well, give us 48 hours. We can get a house prepared. So we were trading, you know, links to the house, and he ended up coming down with his family for several months and rented a couple of homes from us and did some training for our staff. And then one time we were out to dinner, he's like, look, I need an hour in private with you. I said. He said, I want to kind of see where you're at, see what your vision is for the company. So. Okay, great.
So the next day, we took a hike, and he said, where do you see also property management going? And I kind of told him this, and I told him about some software ideas. My brother's a programmer, and I was talking about how I wanted to do this software thing. And turns out there's a company called Breezeway that already did all of that, that he told me about that I didn't know. I mean, all I knew was hostfully. And he said, look, if you're serious about this company and this business, you know, you need to become members of Irma, and you need to go to the Burma show, period. That will open your eyes and see what you're. You know, what's going on. I said, okay, I'll. So I did. I mean, that day, I went back, signed up for VRMa and went, or became members. Then we went. I went to the first show in San Antonio. That was the first one I went to. So that's 2022, I believe. And, you know, at the time, they had missed the year before. So people are talking about how small it was. But for me, it was eye opening, you know? And he asked me, he said, look what you're describing in terms of kind of managing properties and cleanings. There's a company called, you know, there's a couple companies that do it. So he gave me a couple names and I went through and interviewed them, and we use breezeway. And then he talked about pricing software, right? So he. All during this hike, he said, look, there's companies out here that they're just going to make your life easier. You're going to generate more revenue. You're going to, you know, and so for us, that was the first time someone had told me about this industry. The rest I just was trying to learn on my own.
[00:39:01] Speaker A: Yeah, okay.
[00:39:02] Speaker B: And then I go to Verma. Then I go to Verma. And I'm sitting there during the general session. You know, we all have masks on at the time, and I feel a slap on the back. And my old college roommate and fraternity brother, Mike Alsko from Coastal Home and villains in Hilton head, he's like, what are you doing here, Nick? I said, well, I know I run a property manager. He's like, so do I.
So, you know, it's just this. This world has just started.
[00:39:24] Speaker A: All.
[00:39:25] Speaker B: All these worlds started coming back together. It's been amazing.
[00:39:28] Speaker A: Wonderful. All right, well, what's next? Do you have a goal? Are you looking to get to, like, 200 units or something?
[00:39:34] Speaker B: Yeah. So we have a goal to get 75 1st, then 100. And I'll tell you, we actually were into. We're up to 68, 69, like, door. So we have a couple of properties that have, you know, unit a, unit b, and a plus b, right? So that'd be three, although it's one. One unit. We took a decision in late 2023, early 2024, where we really started to decide we were having some challenges with some homeowners in terms of treatment of our employees. Tone. I mean, just what I felt, you know, not professional, although their houses generate a lot of revenue. So you're kind of conflicted. We decided to say, enough. Like, we. We are focusing on owners in 2024. So with the right homes, with the right owners, that's our focus in 2024.
[00:40:22] Speaker A: So not looking to go huge. You want to be selective and choose the right owners?
[00:40:27] Speaker B: Yes, we still want to be big because we have the infrastructure in place and we're the biggest in the area right now. We're about. Oh, you are two x. Yeah, I mean, so as you start pushing north to like Jaco and Guanacaste, they're up to, I think, 150. I mean, Picasso's got 300, but they're scattered throughout. So there's some, there's companies in Guanacaste, Tema, Orendo, Playa de Coco that have, I think, 150 much bigger than us at 50.
But we were at, you know, almost 70, 90 days ago. And we just took, we just decided like, enough. And so we've. And you know what we've learned at the same point, we hired a revenue manager and by getting smaller, we're now projected to have 40% higher sales. We're focused on better properties. We're trending right now at over 41% above last year, year on year with fewer homes. So what we realized was we were growing and we were managing a lot of homes that were taking too much resources, time, energy for not a big enough return. And we were putting up and spending a lot of human capital dealing with owners that don't fit who we are, which is, you know, we're very professional. We're the only legally operating property management company in our territories. So, which means we're registered with all the local municipalities, we're registered with the tax authorities, we're registered with SuHAP, which is an anti money laundering organization.
We know that because we check that to the point that the municipality in one of the areas we work in has asked us to say, help us what we're missing, educate us. We're tied in with homes and villas, Marriott. And I've explained to them several times, there were a couple times they had homes on their property where I said, look, you're working with an illegally operating company.
As this industry is coming under attack with, with regulations and stuff, it's in all of our best interests to make sure that all of us are following the rules, because then it becomes easy for regulators to put in terrible rules that the New York City type rules that none of us want to see.
[00:42:33] Speaker A: Okay, all right. If I'm a guy in Florida and I want to buy a house in Costa Rica, can I buy that house and make money off rentals or it's just a part time situation, etcetera, could you do it?
[00:42:47] Speaker B: Yeah. I mean, could working with us? Absolutely. We've got some homeowners that do very, very well.
[00:42:53] Speaker A: Interesting. But I gotta buy it.
[00:42:55] Speaker B: And in Costa Rica you own it, so it's not like Mexico. So as long as you're not 200 meters from the short, from the high tide mark. This is fully titled property in your name or corporation name.
[00:43:06] Speaker A: And this is all cash is the downside.
[00:43:11] Speaker B: The downsides, all cash. There are a couple of banks that are, that are saying they're offering financing. We have one client who's gone through it and he said it was the most painful thing he's ever done. But at least that's a. There's a foothold, a toehold right now, but the us banks won't do it. I mean you have pulled line of credits or anything else.
[00:43:27] Speaker A: And how much does one of these houses cost?
[00:43:29] Speaker B: The nice ones are a million or more.
I mean the really, the best cash flowing ones, the.
In terms of ro and Roi, you can get good ones for 300,000. It just depends what you're looking for. You know, if it's a straight investment and you're looking at it as an ROI 350.
You know, our houses as we're coming out to, you know, via San Buenos, we'll be launching later this year. We're coming in the high twos. Those, those will do very well.
If you're looking at a luxury home, four to five bedroom with ocean. With great ocean view, it's a million or two.
[00:44:03] Speaker A: Interesting.
[00:44:04] Speaker B: Okay, remember, Costa Rica is a global destination, right?
No. Well, property taxes are one quarter of 1% for the first three to 400,000. And then after that there's a little bit of a luxury tax. But in terms of, compared to the United States, property taxes are very low. There is no tax advantage in terms of.
As a us citizen. Right, I got you. The IR's has direct access to all banks in Costa Rica. So there's no banking advantage. Their banking systems are actually quite good and quite advanced.
But there's, you know, there's not a tax advantage to speak up.
But, you know, again, as, as we manage properties, we keep track. So we have in house accounting as well to make sure we do all bill pay. Like you'll never pay a bill, like we pay all your bills with the rental income and everything else, but.
And then in the moment you sell your house, you get. You can offset, you know, some of the capital gains and all of that. We have all the. Right, we keep all the records for that.
[00:45:07] Speaker A: Got it. Okay, well listen, this is fascinating story. It's absolutely fascinating. What's the future, you're just going to focus on the property management company? Are we going to have a new wife, anything like that?
[00:45:17] Speaker B: Well, yeah. I mean, Abigail Vargas and I are together, so I guess, you know, you put me on that spot here pretty rough.
[00:45:24] Speaker A: Oh. So love is in the air.
[00:45:29] Speaker B: The property management is still our focus. I am launching via San Buenos later in 2024, which will add an element of the development. There's a bunch of people, engineers and everything else working on that now. So we'll come back to the sales side of that probably in 2025. But at its core is our property management. And one thing we didn't even touch on during COVID we started a tour company. It's own llc, because we handle so many people coming into our homes, they're coming there for tours. So we started our own tour company.
[00:46:04] Speaker A: Okay, wonderful. All right, well, listen, fascinating. Unfortunately, ladies, he's not an eligible bachelor at this point in time.
But I appreciate you coming on the show, man. And stay in touch. I love it. It's good stuff.
[00:46:20] Speaker B: Yes, sir. I appreciate the opportunity. It was fun.
[00:46:22] Speaker A: What's your management company called again?
[00:46:24] Speaker B: OSA Property Management. What is a property? Oh, this is actually a region in Costa Rica.
[00:46:30] Speaker A: Oh, that's the name of the area.
[00:46:32] Speaker B: Yeah, yeah, we. I tell you what, real quick. We. I named it that because. For SEO reasons.
[00:46:37] Speaker A: Right.
[00:46:37] Speaker B: I knew that property management in the name and Osa is only three characters, so.
[00:46:42] Speaker A: Yeah, that's. Hey, why complicate things? You make people confused when you come up with these weird names. You know, it's just.
[00:46:47] Speaker B: That's right.
[00:46:48] Speaker A: Like the short term shop.
[00:46:50] Speaker B: That's right. It's exactly the same.
[00:46:52] Speaker A: But anyway. All right, brother. Appreciate it. Thanks for hanging. It's short term rental management. Don't overthink it.
