50 years - 50 Countries

Peter visits Central America

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"This is either the most blatant con game ever, or this is and incredible opportunity," I thought. I'd been in the car only a few minutes when Dave said that the piece of property that I had come to Costa Rica looking to invest in, was not that good of deal compared to the piece they were now driving me to. Before we got there (which was only about fifteen minutes away), I had learned that in order to hold this "incredible deal", someone needed to wire $75,000 to a Costa Rican account by the next day!

This trip was really, really spontaneous--like I heard about it on Sunday, bought the tickets on Wednesday and left on Friday! Steve (my brother) had mentioned several weeks ago that a friend of his at his office was lining up a piece of property in Costa Rica for development and wanted some investors. I had been working through the investment training by Unique Advantage and learned that all my meager efforts to put money into my IRA and depend on the market to grow it were a pretty lame investment strategy. So, when Steve sent me some pictures and said Dave was going to be in Costa Rica for a few days and if I was interested, I should go take a look for myself.

I checked online and tickets were about $600 through Sidestep. I could handle that. I waited a day or so and checked again, this time on Delta where the flights were $530. I mentioned to Willy that I was going and he said, "OK". I looked for other excuses not to go, commitments to stay home, etc., but couldn't really come up with much. I kept watching fares and they didn't change so I called Steve, "Come go with me!" I said. He was in turmoil at work and couldn't. Dan was just getting on a flight to Virginia to check out a problem. Ben said, "No way!". Frank said he couldn't with work. Don was the only one that possibly could go but he didn't have a passport. I even offered them all the brother discount-I pay on a non interest, 10 year loan and if it didn't become convenient to pay in that amount of time, the loan was forgiven. No takers… I even offered it to Willy and to Steve Saunders. Steve said, "My brother just went to pick up his missionary son and considered it a "rescue" from the place. He said it was awful and never wanted to go back!

I then checked the fares again and noticed that I had made a major blunder in checking doing my own flights. Instead of staying 5 days, I was staying a month and five days. I changed the dates-but the fare remained the same. Must be meant to be I thought and clicked the "authorize purchase" button. I had been texting Dave Turcott, Steve's lawyer buddy, and he said coming on Thursday would be better but that actually was a lot higher fare ($1950) so I left Friday morning. Richard was on a road trip to the singles conferences in California and Arizona so Rachel and the Latham kids are taking care of the dogs.

The flight was uneventful. No panic in parking, no lines at security, no delayed flights… strangely good luck. I got into Costa Rica after flying through Atlanta - about 10 hours after leaving Salt Lake. CR is the same time zone as Utah (although the sun comes up at 6 and goes down at 6 - every day of the year). The airport was small but very nice and lines through customs weren't that long. Lots of plasma screens showing the beautiful scenery around the country. One sign showed up several times, "Having sex with children under 18 is illegal-Costa Rica will pursue and prosecute you!" or something to that effect.

People are very friendly. The Hertz guy asked me if it were my first time to Costa Rica and answered all of my questions in good English. He even lined up a hotel nearby as I hadn't made arrangements. Dave had recommended the Marriott Hacienda but it was $280 a night, by far the most expensive hotel in Costa Rica. The Millennium Inn was $50 and while it had no air conditioning it was quaint and clean.

My rental car was not quite what I had expected when I had selected a 4x4. It was a Daihatsu that was about the size of a big golf cart. Didn't have much of a top end for speed but that was OK as the maximum speed in the country is 80 KM per hour (about 50 mph). I got up at 6 a.m., breakfasted on fresh papaya, pineapple and scrambled eggs with rice and beans. It tasted very good but something triggered a purge of my digestive tract about 14 hours later.

It looked like there was one main road to the west of San Jose. The airport was west of town so I didn't even see the city. Things immediately reminded me of Thailand-like 30 years ago. People riding bicycles, fruit stands by the road piled with mangos, watermelon, papaya and a few bananas. The countryside was much more mountainous with large peaks in the distance. Costa Rica is very diverse with several active volcanos, farmland, beaches, rain forest, coconut groves and this time of year, dry ground.

There are two seasons, green and brown. The brown was just starting and it not rained for a few months. But it was still very green and lush. The bogenvillias were out in shades of purple, orange and red and ferns, and bhodi (or at least what look like them or teak) trees were everywhere.

I wasn't looking at the map but the road turned north and I realized that I had missed the turn to the beach. I caught another road south in a few kilometers and wound through a sleepy village with a purple Catholic church at the center, along with the soccer field. The roads were narrow and would have been considered one lane had I not been in such a narrow car. By 8:30 I was driving along a beach and stopped for a few shots. By 9, I was in Jaco.

It took me a while to figure out the pronunciation of Jaco. I was thinking it was Jayko but then realized that J is sometimes Y so was calling it Yako. In reality, it's Hawko with a little emphasis on the "H" which gives it a cool sound. My first impressions were not that great. Potholes in Jaco, dirt road in some parts, a sort of Ensenada/Tiajuana feel and tanned, tattooed trekker types walking around. Stalls with tourist trinkets, street restaurants a few pharmacies and several real estate offices. It was a hoppin place though and lots of activity, including new construction right between the main drag and the beach.

I found an Internet shop and texted Dave. "I'll meet you in 30 minutes at Pancho Villa's", he responded. I didn't know where you could park, whether you needed to pay someone to guard the car or whether it would be safe. The Hertz guys were thorough about inspecting the car and making sure I knew how to use the special transmission key lock and the spare tire lock-and suggesting that I get insurance which I declined. But I left it on a side street and waited for Dave. Not knowing who he was, or what I was in for, the longer I waited, the more I wondered about this whole thing. He hadn't called me like he said he would, He hadn't returned a couple of text messages. And by now, he was an hour late. I wrote note, left it with the waiter and went back to the Internet shop.

He had messaged me he would be late and by the time I got back to Pancho's, he was there. He introduced me to his partner Troy, a tanned surfer dude who had been living there. "I'm not sure what your situation is," he said. "Steve just said that you had a group of investors that were interested in Costa Rica and wanted in on this deal. We're not going to look and the property you came to see but another one that is a bigger project." The reality was, I just wanted a break from the office and a little adventure and this was an opportunity to go to my 50th country during my 50th year. With the change in property and the what appeared to be "ready-fire-aim" plans, I wasn't planning on investing in anything.

Troy was immediately running through numbers. "We're getting this for $4.50 a square meter while other land around it is selling for $400 a square meter. Things are poppin. I've got another 3-unit development and just sold a unit for $400k which paid for the other three. Construction costs are cheap. This guy is a grading contractor and will cut in all the roads for us."

I started asking questions, some of them not easy, and soon found that both Troy and Dave were honest and consistent in what they said. This really had been a coincidence deal that came through a friend Ivan who was friends with the owner Victor who was a farmer and had some grading equipment. (I ended up meeting each of them coincidentally a little later). Dave and Troy were talking about other things they had going in Quepos and Estruellos and I was trying to keep it all straight.

We drove up to the property. Unlike some of the other places close to the beach and several story, this was tucked back up a canyon. It was really a magical place in a way. Very quiet with running water and the sound of the tropical forest with birds, insects and lizards. There are about 9 hectares (2.46 acres per hectare) that are flat and ready for development. The entire project, at the costs Troy was quoting, could be profitable using only this 9 hectares but there were actually 95 hectares total-much of the rest of it is hillside.

We took their rental (a Montero which was a large car for the area) and drove the upper property. A service road had been cut for power which was already in place. Very steep but very common. As we ascended, the view was spectacular! Tropical forest to the sides and a straight clear shot of Jaco, the beach and the ocean. The plan is that Victor will cut home pads for the cost of fuel and wages and these can be sold or built on as the project unfolds. It was at looking at some of these views that I first began to get a little excited about the possibilities.

Dave was talking a mile a minute and pointing out all of the possibilities. I was shooting pictures and trying to catch up. We drove back down and then to an area that Victor had been using for an excavation pit. It's pretty amazing how steep and narrow they go with equipment!

We then drove to Esteruellos where Troy's development was. All of the "already developed" areas have both a mix of nice and not so nice. He had a lot on the hill over the beach that is next to some tin shacks. But he had built a 3 unit condo building that had nice space, great layout and spectacular views. The top unit was his with vaulted ceilings and a corner, no column glass that will be very dramatic. His house was just up around the corner and it was nice as well.

We agreed to meet later for dinner and I set off to look at some comparables that they recommended. The first on the list was a place called Nativa that was out of town towards San Jose about 20 minutes. A beautiful approach with grand entry and guard. A mile or so of meandering approach brings you to the top of a hill overlooking the ocean. The development sprawls down the hill. Three buildings of condos with a 2 bedroom unit going for about $700,000. Only two left! There were many home lots but most of them had not been built on even though they were sold. Another development of condos was under construction in the same price range. People at all the developments were very nice with no pressure.

Then back to take a look at Las Suenos, a Marriott development. Holy Cow! It could have been something in Newport or Orange County except for there was much more room. A golf course, club house, hotel, and a large new marina, filled to capacity with very nice motor yachts and a few sailboats. Condos there were in the $700-900k range and homes were a million.

Troy said to meet them at Villa Calentes to watch the sunset and have dinner. What a place! A hilltop resort built overlooking the ocean. Again, a steep, narrow drive along a ridge to get there (which seems to bother no one-not many slides but they do get earthquakes once in a while). They were supposed to be there at six but no sign of anyone. I sat on the balcony, watching the sunset alone and drinking ginger ale surrounded by loving couples (mostly American) and a few families. On a lower deck, a wedding was going on and we were all serenaded with live classical music choreographed to the setting sun. Would have been great to have someone along on this trip!

After about 45 minutes, I decided they weren't coming and after this morning, thought they may be flakes so was going to leave and call it good. Going down the stairs, I ran into Dave and they had been waiting in another area-so I joined them for dinner and we had a good time. Dave's girlfriend Monica and her friend Alyssa from Salt Lake were there. Troy and a couple of Dave's friends from BYU Law school, Rod and Steve Andrus. We had a nice dinner and good conversation. It was an excellent meal and not bad at about $35 a plate.

Dave had connections (or so he thought) at a hotel. His rate was $125 per night and all the rest were staying there so I thought I would check it out. A rough, gravel road to get there but going through the gates was like entering another world. Beautiful tropical landscape, all lighted with pathways to the bungalows. A shimmering pool with waterfall and quiet. The rooms were very nice-on the order of the Sundance cabins-with air conditioning, something that's needed almost everywhere except for the mountain tops or in the water. It was a sample of what could be built in the canyon.

Day two, I headed south to look at more comparables and get a feel for the area. South of Jaco it's real countryside. Farms of Brahma cattle, huge, beautiful trees, green pastures, farmland, miles of coconut groves and a few villages. I found the gas station near where the first parcel of land I had come here to look at… not nearly as impressive as the Jaco canyon piece. I drove past Esteruellos and then Hermosa. Miles of beautiful beaches with nothing but pasture and cows to back them up. Much of the sand was black volcanic which Troy says burns your feet. I passed a couple of resorts like Rancho something which had an airport. I drove in, looking for the runway and then when I turned around, realized that the approach in was also the runway, complete with windsock.

I came across a very nice estate development which was pretty isolated but really beautiful. Some nice homes were going up and the Las Breisis restaurant was like a castle built on a hill in the middle. Prices for home lots here are between $200-275k. The master plan shows a golf course going in. The back side of it was wide open country with mountains for horse trails and ATV riding.

I drove on to Quepos which appeared to be a real dive, quite trashy and run down. There is a marina there where many of the sport fishing boats go out. But just beyond Quepos is Mount Antonio, a national park. The approach is several miles up over a mountain and then down to the beach. At the start of the mountain, the quality of homes and buildings picked up dramatically and on top were some very nice boutique hotels and restaurants. I took pictures of one restaurant built around a cargo transport plane. The beach was very nice with white sand, jutting rock islands and long peninsulas. The beach was free ($2 or 1000 catolinos to park) but entrance to the park was $7. Inside was very nice with beautiful sand coves, monkeys, iguanas, and little crocodiles.

I decided to make the trek around the peninsula that, in places, was rather steep. It felt good to be using my bicycle legs as they had been in a plane or car for most of the last two days. Some beautiful vistas and at one point, I went off the trail and just sat and listened to the sounds. Very few people were on the trek.

With the sun pretty much overhead and no angle to it, I had a hard time telling direction. I came down to a beach and then headed on the trail that I thought was back out to the entrance. I hadn't eaten that day or brought any food or water and thought I should be getting near the trailhead. But it seemed to go on forever. At one point, I came to a vista, looked out at an island and thought, "All these islands look the same!" Descending down towards another beach, I noticed a large smooth stone that looked vaguely familiar-yes, I had gone clear around twice, not even realizing that I was retracing my steps! Either it's hard to navigate in jungle or I'm old and losing it!

On the way back from Quepos to Jaco, I noticed people playing soccer. On a Sunday afternoon, it seemed to be the thing to do. Little kids, teens and even teams of men. Not much going on at any of the few Catholic churches I saw-in fact, they appeared to be closed-but everyone from the villages were out watching soccer. Talking, sitting under umbrellas from the sun, as families and friends.

Coming into Hermosa, I saw a road that advertised houses with hilltop ocean views and took it. My little 4x4 Daihatsu got put to the test! The roads went up and up and up and soon I was driving along the mountain ridges east of Jaco. The road followed a power line and there were a few home lots graded on knolls with "for sale" signs but not much being built. There were a few homes on other ridges that I could see and they looked very nice-must have had spectacular views. The stillness of the mountains with the birds, insects and views of the clouds over the ocean.

When Troy, Dave and I had driven to the top of the Jaco canyon property, we had noticed a truck drilling a well at the top of the property road. I thought that the road I was on may meet up with it so kept driving. It did…eventually...but only after scaling some really high ridges, higher than the dense tree line where there were just grasses and red dirt.

Going down the property road, I realized just how steep it really was. By now it was almost dark and I kept hoping that I wouldn't hit a rut and flip or slide over the edge. I rattled back into town and had a little difficulty in finding the hotel after dark but eventually did.

Dave called to see what I was thinking. He's a mover and (much like Willy) is an artist in working multiple levels at once. I had come across one development of small houses being built by some guys from California who were living here surfing. They had built small patio homes 300 meters from the beach that on the sign they advertised for $55k. The signs were old and they were almost sold out with prices now around $125. That's over double in just a year! They had another development up the road that they had just broken ground on. No beach view but nice mountain view. This kind of 'competition' was unsettling as I thought it might be hard to compete with if you have a condo that's selling for $300k and you can buy a comparable house for $150. Didn't seem to bother Dave-"loss leader" I think was his term, oh and "crappy".

The other thing that bothers me is that there are tons and tons of roads and home lots and many signs that say "For Sale!" Most of the advertised developments are pre-sold, not even built yet. Lots and lots of speculation with probably over 70% being bought by investors. The key to being successful would be a prime piece of real estate and a formula that doesn't depend on selling for top dollar, plus managing it very well with a nice offering. Many that are selling are just tightly packed condos with no real view, great location or nice style. People are paying for rental and appreciation futures.

Anyway, Dave soothed my concerns and I thought about it more before going to sleep. "You should talk to Ivan," he said. Ivan was the fellow that was helping Victor sell the property…sort of like his agent. I met him the next morning and again, he was very honest and forthright with all the questions I asked. He gave me figures on what other property was selling for, construction costs, paving costs, optimal units per hectare, the permit process, etc. "What about… bribes?" I asked. "Corruption? Yes we have that too. But it's not expensive. Maybe $200-300. It just keeps your paper at the top of the pile."

I checked out a few more developments, one that was owned by a woman and was almost sold out except for two units. It was about half done with construction and they sell for $225-250. The receptionist was a beautiful girl from Israel named Heila-something about those Israeli women! Another home development that had only mountain views and it was just being finished out. Lots of construction going on!

I headed back to San Jose, stopping for a fresh cut mango and some ice cream. A very nice drive and although very narrow and windy, no close calls. I checked into the same hotel, deposited my bags and headed into San Jose-right in the middle of rush hour traffic!

It took me a while but I eventually made it to the central district and drove around until I found something that looked like a pay parking lot as there were NO parking stalls on the narrow streets. Cost to park was about $1 per hour. Currency exchange is 500 Colones to $1 so the numbers can get big in a hurry. My hotel was 25,000.

San Jose could easily be perceived as unattractive. Most of it is standard construction of cinder brick, covered with concrete, painted a bright color and then left to weather and darken. Lots of street level shops with metal gates that drop at 6 p.m. when it gets dark. Traffic, pollution and belching buses everywhere. All the taxis are red Corolla types.

In the center of town however, is a large Catholic cathedral that has been renovated in earthy green stucco. Across from it is a large central square with benches, trees (filled with squawking birds) and a clay red, domed memorial. The National Museum is close by and just off it are about six or seven blocks of a walking mall with shops and restaurants on each side.

At one end of the mall is a large, indoor market similar to those I've seen in Asia where you can buy anything from fresh meat, to pans, to leather goods, to clothing, to brooms. I had debated what to get the nieces and nephews for Christmas but finally settled on something (which I won't write in case some of them read this). The girl's eyes got very big when I said I wanted 50 for my nieces and nephews and asked her if she could make a deal. "Of course," she said so we sorted and piled and I went over my list. I got an 11 percent discount but only after she called the owner too make sure it was ok. But in the end it wasn't that good because I had to pay with credit card and credit card transactions cost them 7% which she had to pass on to me.

I ate a dinner of steak, rice, beans and salad and just watched people on the sidewalk. Very interesting to try and determine what they are thinking, feeling and experiencing and guess where they might be going. People look different all over the world but expressions are the same everywhere.

Back to the car after dark and then to the hotel where I turned in my car. Looking at the insurance, the replacement cost (for which I was entirely liable if anything had happened because I waived insurance-I need to make sure American Express covers that) was $16,000 for that golf cart! I guess there is a 40% surcharge on imported vehicles!

To end the day, I walked to Denny's (the high end restaurant there) and had a banana split. It was just as nice, well actually nicer than those I've been to in America. Everyone spoke English fluently. Dave said many of the restaurant people have worked at cafes or hotels in America and then returned home. Seemed like it there and the split was just as good.

A wakeup call for 5:15 and I was at the airport by 6 where I stood in line for about an hour to get to the ticket counter. I talked to a girl that had been teaching English in Spain and was visiting teaching friends in Costa Rica. Smooth flight back to Atlanta where I spent the six hour layover finishing a writing project, looking up the comparables on properties on the Internet, and running numbers.

Here's what I have so far. In the most conservative estimates, if everything goes ok, the project could still net over a million dollars on a 4 million investment. In a really good scenario-based on what Nativa is doing, it could be a $45m return. I quickly rechecked my numbers to make sure. I need to check them again but they were the same after one recheck. I called Blair Arnell and asked for some of his time in the morning to run it by him as he has done this quite a few times before in the states and he is willing.

Dave has messaged me already. I find it a little strange that in all the comings and goings and people and connections and big deals that both Dave and Troy have done, that I'm the only one that appears to be able to immediately wire $75k to hold the deal for 30 days. Ivan said we needed to make it happen fast because Victor had another offer for $1m more than we were paying.

We shall see. It has been really exiting to think about… more the building and creating something than the money. I think I could easily walk away from it as well, just sort of having thought through all the ramifications. On the other hand, it could really be a fun project as well. I don't think it would be any worse, or I would be worse off doing it than doing what I am doing now. . .