We finally got a loan

At this point, we are moving full steam ahead on the project. HHR, the company that is doing our infrastructure, has been very pleasant to work with. It’s been very different from the previous experience I had with the companies I used in Utah.

Fortunately, we’ve been doing the dirt work under ideal weather so far. We are determined to get far enough that the rainy season won’t deter our progress.

We got a loan funded this week! It has been very difficult to find people to lend. It’s very apparent that if you want to develop in Costa Rica, it requires a lot of cash. This isn’t all negative. It brings down your overall return as more equity is required, but it does keep the market in an equilibrium that allows for good returns without a lot of leverage. 

The loan we got was from a Costa Rican group. The terms were costly. The loan is for 2 million. We are paying 12% and we had to pay 5 points up front. We will likely burn through that amount in under 4 months. 

That will give us the capital needed to nearly finish all of the infrastructure. While the loan is expensive, we are at a point where the risk is beginning to go down. We will have a lot of equity in those lots once they are finished. 

The only question after that will be the best way to extract that equity. That has become a heavily debated topic within our group. It’s become very apparent as we started to presell lots that if a customer will bring in the liquidity for a home, then we can get a higher price for our lot from the builder. 

This is pushing us to consider a situation where we retain control of the home sales and are still the face of the transaction, but we partner with a local builder. 

Last week, I asked people to reach out if they wanted to buy our model home at cost and rent it back to us. I had multiple people reach out. We are currently narrowing down everything from the lot and floor plan to the interior selections. When I have it all selected and the bids finalized, I will send out an email to each one of you with those details.