The New Real Estate “Paradigm”, The Vacation Money-Machine

Introduction

 Real Estate has always been, “the” best and fastest route to wealth, whether you develop it, build it, sell it or invest in it. Look around, you will see that the wealthiest of the wealthiest are the “Real Estate Tycoons”

Most wealth-making ideas, require that you invent, produce, market and compete in the chosen industry and you, the entrepreneur is expected to live and breathe the project.

Of course, the great ideas rely on luck, hard work and the assistance of ANGELS OR SHARKS to fund them, unless you are a member of the “Lucky Sperm Club”, those who are born into wealth.

Enter Real Estate, open to everyone, regardless of your social status, you don’t have to invent, enslave nor live and breathe your idea. Most, if not all the concepts are already in motion, YOU choose the one that suits you.

There are Fix and Flippers, Buy and Flippers, Buy and Holders, Developers, Urbanists, Builders, Commercial Specialists, Sellers and Investors, all will tout their money-making abilities, especially when the market is strong, and properties sell more rapidly than hot cakes.

Real Estate, when properly selected should be your path to make lots of money, just keep your ears open and let your brain work out the numbers and don’t let your fears overtake your decision.

The new Real Estate Paradigm is the purchase of a vacation home that makes, not loses money.

While most everyone is enamored with the idea of owning a vacation home, especially in an exotic location such as Costa Rica, often concerns about maintaining it, or even justifying the expense when it’s only used a couple of weeks per year that keeps many from making the vacation home dream a reality.

I remember when some of us were puzzled when Jack De Boer, the founder of the Residence Inn, came up with that weird concept of building apartments to rent them as hotel rooms. It was the idea that if his concept failed, he could always rent them as apartments. Brilliant.

Since then the concept has proven to be a success and now with the advent of the Internet, marketing giants such as Airbnb, Bed & Breakfast, Booking, Priceline, Trip Advisor, many more and in their business model, they only charge commissions for placing their guests in your house. The Marketing Dilemma of the new paradigm is resolved, economically and efficiently.

In the Hospitality/Travel Business more and more travelers are opting to stay in apartments or homes rather than hotel rooms, the occupancy issues are also resolved, the market keeps expanding and expanding.

By the usage of these integrated systems, you are on your way to becoming a Tycoon, you may now invest less for a higher return and with no more risk than owning your home.

Sounds like a Panacea but let’s look at the most basic task of owning Real Estate and that is its management, in one simple sentence, IT IS A PAIN IN THE NECK, so why even think about becoming an owner of rental vacation properties?

Forget about the old ways, purchase your vacation home in a place where tourists go and look for comfortable, less expensive accommodations, it is well maintained, and it has an on-site manager that can handle your affairs, your job is to just sit back and enjoy your earnings. With this last piece of the puzzle, your job is just to count your money, you have finally made it, you are making money work smart, not hard.

The Costa Rican Pura Vida

The concept of a vacation/investment home starts with the selection of the proper location, the right property at the right price, the management of the property and the payment of your earnings quickly and efficiently.

 You can find this Paradigm at Estancia Wellness in Guanacaste, Costa Rica, one of Costa Rica’s fastest growing areas where Eco-Tourism IS the attraction. The area possesses abundant Thermal Waters, Hiking, Unequalled Flora and Fauna, Extreme Adventures, Restaurants, Spas and even Mud Baths. The North Pacific Beaches and the International Airport at only 30 miles away, all paved, good roads.

 At Estancia the homes are three times the size of a regular hotel room, they are fully equipped, they boast two, three even 4 bedrooms at the most affordable purchase price and rental values anywhere. Homes start at $42,000

You own the property FEE SIMPLE, just like at home. This is NOT a timeshare or a fractional, it is a WHOLE ownership

You may sign an agreement allowing your home(s) to be rented through the Rental Pool. This Rental Pool Program is NOT mandatory but recommended

 And you can use your property anytime and for as long as you want.

The Market Place

According to Costa Rica’s National Institute for Tourism (ICT), Costa Rica is in demand and is ranked 56th in the world for tourist arrivals. In 2008 alone Costa Rica received just over 2 million tourists which generated just over USD $2.14 billion in revenue.

Costa Rica’s geographic position as a bridge between North and South America allows it to possess coasts in the Atlantic & Pacific Oceans, variable topography, diverse soil combinations, and climatic variations. Therefore, Costa Rica is an eco-tourist’s paradise. Costa Rica is considered one of the world’s most bio-diverse regions in the world. According to Costa Rica’s National Institute of Biodiversity, Costa Rica is home to over 4% of the world’s biodiversity. Costa Rica has more species of butterflies than the whole continent of Africa does. Over 25% of Costa Rica’s national territory is dedicated to conservation with over 20 national parks, 8 biological reserves, animal refuges, and several protected areas.

Tourist activities include boating, sport fishing, golf, tennis, spas, shopping, canopy/zip line tours, surfing, windsurfing, kayaking, snorkeling, diving, horseback riding, ATVs, hiking to volcanoes, rainforests, hot springs, beaches, & waterfalls, and wildlife observing (whales, dolphins, other mammals, sea turtles, exotic birds, crocodiles, other reptiles, butterflies etc.)

In 2007, over 70% of those who entered Costa Rica stated their purpose of travel as a vacation.

Tourism overall in Central America has increased by 18% in the last 4 years, mainly due to increases in tourism to Costa Rica and Panama. According to ICT, for 2007 Costa Rica experienced a 14.8% increase with respect to the year 2006. Some factors that contributed to this increase include additional routes for more international flight arrivals, a larger size of planes arriving in Costa Rica, stronger international marketing and publicity strategies, cooperation between ICT and the airlines, increased number of tour operators, and new contracts with public relations campaigns in Europe, US & Canada.

Based on studies done in international airports of Costa Rica, the following information was obtained through direct interviews regarding the profile of Non- Residents visiting Costa Rica:

-         43% were over the age of 45.

-         82% were higher education and had obtained at least a university degree or postgraduate degree.

-          54% resided in the US, 18% in Europe, 12% in Latin America, and 5.6% from Canada.

-         From the US population, 21% were from Florida, 16% from California, 8% from Texas, 8% from Colorado and the rest from other States.

-         Those from Canada were 34% from Ontario, 20% from British Colombia, 17% from Quebec, and 12% from Alberta.

-         For 59% it was their first visit to Costa Rica, for the remaining 41% they had visited before with an average of 8.5 visits.

-         70% stated their reason for visiting as vacation, break, or pleasure.

-         16% stated their visit as a business or professional motivation.

-         10% stated their visit to visit friends and/or family.

-         2% stated their visit for educational purposes.

-         The principal activities (in which they could select more than one category) were 57.2% for sun/beach, 45.5% for hiking/exploring, 43.1% for volcanoes/hot springs, 39.2% for viewing flora & fauna, 30% for shopping, and 30.1% for bird watching or other activities.

Be well positioned to take advantage of the millions of visitors that arrive in Costa Rica each year and let your pocketbook jingle with cash.

Your Home, Your Money, Your Time

The utilization of a second home is about 39 days per year, it is also known that most purchasers will enjoy their second homes, but they soon become tired of returning to the same destination, that is why owning a Money-Machine is a much better alternative to owning a Money-Pit.

A look at the numbers

Here is a PROJECTION of a 2 Bedroom home purchased for $58,000, rents for $75 per night and at 60% occupancy, it yields a CAP RATE of 28%, the initial investment is paid off in 3.58 years

Financing Alternatives

These alternatives are available to you in all the homes, regardless of size and by leveraging the purchase, your return is HUGE, and the risk is even less.

As you know leveraging the property gives you more buying powers, especially when the lender is the seller

OPTION 1

Buy a 2-bedroom home for $58,000, pay $29,000 and use the earnings to retire the balance, no matter how long it takes, and YES, the property is in your name. There will be a mortgage recorded against the property for the balance

You are 100% owner of the Deed, you get 100% of the income

The Management Fee is only charged against earnings, it is an Operating Expense, but if there should not be any income, you would be responsible for 100% of the expenses such as Taxes, Insurance, and Maintenance.

All the profits and appreciation are yours, OWC 50% at 7% per annum.

OPTION 2

You may opt for a Partnership with us and purchase 50% of the home for $29,000.

You are 50% owner of the Deed, you get 50% of the income

The Management Fee is only charged against earnings, it is an Operating Expense, but if there should not be any income, you would be responsible for 50% of the expenses such as axes, Insurance, and Maintenance

    50% of the profits and appreciation are yours, Zero Monthly Payment

Let’s Review the Deal

1. We take a quantum leap from the common Vacation Home Ownership by making sure that the cost of ownership is eliminated by the income the home generates
2. No Marketing Costs, all is handled by well-established International Companies
3. No management headaches
4. No Maintenance headaches
5. No worries about paying taxes, insurance or utilities
6. The appreciation of your home is YOURS if you own 100% of the home
7. The property may be inherited by your children or relatives
8. You just sit on the rocking chair and collect your money

This Article was created by Dr. Hugo Edward Ribadeneira, who is currently developing this concept in Costa Rica. Realtors are welcome, Commissions are paid. We are looking for investors and people that wish to operate their own businesses. He can be reached at 506-8353-7386 or at [email protected]

Businesses Available:

1. Restaurant/Bar
2. Dental and Natural Medicine Clinic
3. Hospitality Operator
4. Convenience Store
5. Tourism Center Operator