Playa Hermosa, Guanacaste!! Another Satisfied Buyer and Smart investor
This article is posted with the permission of Mr. Fed Hickey,
the publisher of THE HIGH-TECH STRATEGIST
Escape Hatch
As you can gather,
I am very concerned about this country’s direction – and have been for years.
The near-total collapse in the financial system in 2008 was a scary moment
indeed, and I’m not sure the risks have lessened much. The “weapons of mass
destruction” (derivatives) remain in place. This country cannot continue down
the path of spending massively more than it receives in revenues. Yet the huge
increases in entitlement spending (which are placating the unemployed masses),
cannot be continued forever. Necessary cutbacks in entitlements could be messy.
For now, we have no breadlines or shanty-towns (as in the 1930s) because the
government takes care of everyone – through its deficit spending. The end
result of the money printing experiment may lead to inflation and a worsening
in the inequality gap between the rich (who benefit from asset inflation) and
everyone else. I worry that our bootstrapping culture is no longer the same as
it once was and our people may react badly in difficult times. Almost 41% of
all children in the U.S. are born to unwed mothers. (all races). For blacks,
the rate is a staggering 72.5%. Over the past several months, some of the best
performing stocks have been gun makers such as Smith & Wesson. Not a happy
thought. While I remain hopeful that we can right ourselves, as we’ve done
before, there are growing risks.
Many smart and well off people are making plans to escape,
if need be. Liberty Media chairman John Malone told The Wall Street Journal (in
2010): “Well, my wife, who is very concerned about these things, moved all her
personal cash to Australia and Canada. She wants to have a place to go if
things blow up here. Canada has a lot more fiscal and bank responsibility than
most places in the world and lots of natural resources. We have a retreat
that’s right on the Quebec border. We own 18 miles on the border, so we can
cross. Anytime we want to we can get away.”
I’m happy in New Hampshire (except in the long winters). I’m
not hoarding stores of food, guns and ammo. Given the choice, I’d rather flee
than fight. For some years now, I’ve been researching potential winter escapes
- with a secondary goal of establishing an “escape hatch.” This year’s bout
with double pneumonia accelerated the search. Canada was ruled out (too cold in
winter). Locations such as New Zealand and Australia were too far away from
friends and family. We looked hard at Florida, but it’s still in the U.S. and
not warm enough in December-February for Kathy. Many Caribbean islands don’t
have enough resources or have drug and violence problems. Finally, a couple of
years ago we narrowed our search down to Costa Rica, and specifically a region
in Costa Rica named Guanacaste.
The weather there is incredible, especially during the “dry
season” November-April, when it almost never rains. The climate is “tropical
dry forest.” During this period (overlaps with the period we need to get out of
New Hampshire) every day is the same: high temps around 90 degrees, lows at
night in the 70s. There’s no humidity because of the lack of rain, Very
comfortable. In the May-Oct. period (green season) it’s nice during the day,
highs in the mid-80s, but it typically rains by late afternoon (like in
Florida). It is humid, but still very pleasant. It’s considered to be the finest
weather in the world.
Guanacaste is the most sparsely populated area of Costa
Rica. It is mostly farmland. You can drink the water right out of the tap. In
the mid-2000s a U.S.-led real estate boom erupted on the Costa Rican Pacific
beach areas. As the U.S. real estate boom turned to bust, so did this area.
There are now incredible bargains to be had. We purchased a house on a cliff
300 feet above sea level with spectacular views in the beach community of Playa
Hermosa. We paid 45% below the original list price (first listed in Sept 2010)
and 20% below the latest offer from a “motivated seller” (an American
businessman). Property taxes are very
low. US citizens have the same property rights as native Costa Ricans. The
government encourages expats. The country has the highest number of U.S.
citizens per capita outside of the U.S. There’s also a huge Canadian presence.
The wonderful Grant’s Interest Rate Observer has in recent months been doing a
series of articles on real estate bargain areas around the U.S. In my opinion,
real estate in Costa Rica is an even a better opportunity.
The people are extremely friendly. Costa Rican’s are the
happiest people in the world (Gallup survey). The literacy rate is 96%, (higher
than in the U.S.). The family structure is very important there. The vast
majority of the people are Catholic. The government is a stable democracy.
There is no army – it was eliminated 63 years ago. Costa Rica is called “The
Switzerland of the Americas.” The unemployment rate is 6% and it was lower (4%)
before the global slowdown. In addition to pineapples, bananas and coffee, one
of the top exports is technology products. Intel has a huge factory in Costa
Rica. IBM, Hewlett-Packard, Proctor & Gamble also have large operations
there (in a different part of the country). Inflation runs around 5%. There is
virtually no violent crime in the area, just petty stuff.
A brand new modern airport terminal opened less than a year
ago, twelve miles away from our home. It is about a 20 minute drive on all
paved roads for us, door-to-door. Most major U.S. airlines (American, United,
Delta, US Air) fly in there, with three hour direct flights from Atlanta,
Miami, Charlotte and Houston. Jet Blue just recently started direct flights out
of New York. We paid under $500 round trip for the 5-hour direct flight from
NY. It is easy access to and from the US for us. A brand new hospital is nearly
complete just outside the airport. At our home we have high-speed wireless
internet access. The cable TV service has about 20 channels in English, all the
major Miami channels (ABC, NBC, CBS), as well as FOX, CNN, ESPN and even CNBC
(OK, so Costa Rica’s not perfect). There are several supermarkets nearby,
carrying a wide variety of American products. The ‘culture shock” is limited here.
To get a sense of the properties available, the following
YouTube video of the very house we purchased is below. This was filmed by the
seller’s realtor. This house has spectacular “million dollar views” of the
Pacific ocean, but I paid much less than that for it. The house is in a gated
community.
http://www.youtube.com/watch?v=dR6PaFi29-U
The history of the house is that it rents well. We are
retaining the excellent management company that’s been managing it for the last
three years. There is a “flagship” Four Seasons resort nearby, as well as a
Westin and Hilton for anyone that wants to come down to investigate. If anyone
wants to rent a house, (including the one we just purchased) the management
company has a stable of about 50 beautiful homes to choose from. It’s much less
expensive than the resorts and renting would give you a sense of living in
Costa Rica. Just send us an email request and we’ll send the link to the
management company.
Fred Hickey