Progress Report

May 13-19, 2007 // CONSTRUCTION LOG #136

Contact phone numbers

Internet Phone:
New York: 315-279-6711
Toronto: 416-907-5758 // 416-461-2203

Costa Rica:
Cell: 506-305-3965
Land: 506-282-4142 Ext. 101

NOTE: the New York and Toronto numbers are "local calls" for people in the area codes; calls from outside the area code will be billed at the normal rate from the caller's area code to either the "315" or the "416" area code.

NOTE: NOW THAT THIS DEVELOPMENT IS ESSENTIALLY FINISHED, THE LOG WILL FOCUS MORE ON THE RIO ORO DEVELOPMENT. IT WILL BE INFORMATIVE TO THOSE PLANNING ON BUILDING, THOSE LOOKING FOR A PLACE TO PURCHASE OR TO LEASE, AND FOR THOSE WONDERING WHAT EXPATS DO IN COSTA RICA AND THE LIFESTYLE OF TWO ORDINARY PEOPLE.

The STORY: Land lording in CR: Even Paradise has it's rotten apples!!

Pictures: none

CONSTRUCTION

The fence inches along, one road is widened and the bridge over the drainage ditch has been installed. The land continues to be cleared of unwanted and/or rotten trees. Again I met with the architect and again we reviewed the floor plans for the larger houses. I'm awaiting a full set of optional designs. I also challenged him to turn the same structure into two, 1700 sf single story units. We'll see what he returns with.

We have decided that we would focus on what we currently have on the go before focusing on any other designs.

RESIDENCIAS LOS JARDINES

Land lording experiences: I've saved up three years of unpleasant experiences and have now decided to tell the stories which have not been told. Prior to managing residential property in CR, I owned and managed numerous rental buildings for 20 years in Canada —somewhere around 300 tenant years. In all that experience, I probably didn't have more than a handful of experiences like I'm going to describe in my approx. 20 tenant years of experience in Costa Rica.

It is often said that Costa Rica is the home of the wanted and the unwanted. The saying is still true, in my experience. The seasoned expat has learned to be more reserved when making new expat friends —probably because they too have been disappointed. Having said that, however, I feel there may now be a higher percentage of people who do not fit that description, who have lots of options and are choosing CR. Whether the former group has diminished, I don't know.

We have a very detailed lease based on N. Am. and Costa Rican experiences. It spells out in substantial detail mutual roles, responsibilities and expectations; we expect to follow it and we expect others to follow it. Having said that, the two most frequently broken clauses which are technically enforceable in Costa Rica are: (1) term of lease (early terminations) and (2) the security deposit is not to be applied against the last month's rent. While these are annoying features which we commonly experience, they are not the worst.

You have to realize two things: The landlord-tenant legislation in this country is the most one sided piece of draconian legislation that I've ever seen —the Socialist party in Ontario (NDP) introduced very lopsided legislation in the early 90s which has, over time, become more balanced. Not so in CR. Therefore, even if the courts did function expeditiously here which they don't, there is little legal remedy. Supposedly CR law recognizes as binding, private contracts of which our lease would qualify. For us to test it in the courts, it will have to be a major issue.

The other thing to remember is that most expats looking for rental accommodations have no history which can be effectively searched. So, the landlord is accepting blind based on what he sees and hears, with virtually little recourse if the assessment is wrong. This is reality as I've experienced it —perhaps others know something I don't. Consequently, the incidence of disappointment is much greater here than my experience in Canada. In addition, I've not been able to detect any difference based on age, sex, economic status or nationality. Stories:

Residencias Los Jardines started as "Blue Skies Bungalows" — 8 very basic s"homes" which leased longer term for $300 mo. or so. When I purchased Blue Skies, I inherited the tenants —virtually all of whom I had come to know—. I set about improving the infrastructure and some of the units as they became vacant. The existing tenants remained on at their historic rental rate as per CR law and were now able to enjoy a more reliable infrastructure and the house improvements made along the way. I replaced the broken down washer/dryer with new coin operated units and provided hot water which previously wasn't available.

One person tried to start a tenant revolt over the pay-per-use washer/dryer. When he was unsuccessful, he did a midnight move taking my furniture with him. I traced him down and after I outlined what recourse I would be taking, he returned the furniture.

Another couple left owing me $400 using the washing machine as their excuse —and it was these same two people who used the previous machine all day, every Saturday— not allowing anyone else to use it and complaining when it was broken and that there was no hot water.

One person threw a temper tantrum when I trimmed the 9' hedge on the side of the house to around 6'. He felt it inhibited is practice of walking around in the nude and now couldn't stand in the front door and scratch his privates. I explained that his privates were not 6' high so I in no what deprived him his pleasure. He left shortly thereafter owing me.

Another person e-mailed me that he had to make a quick return to California to look after his dieing mother —on inspection of the house, it was a mess, which was not surprising since his "wife" had 6 kids who visited on a regular basis... We heard he subsequently returned to CR and disappointed a number of other people.

One elderly couple who fought terribly with mutual verbal abuse announced one night they were leaving the next day. Reason? They couldn't remember how to open remotely the gate and continued to claim it was equipment malfunction —despite numerous training sessions and written instructions. Example: "dial 1 and hang up the phone".

I then developed Residencias Los Jardines and the nature of the product changed dramatically. We command premium rents which reflect the type of product we offer —the stories don't change much:

We had one guy who we later suspected of being manic depressive —he was certainly an alcoholic. At one time he was over 90 days late on his rent but both the owner and us felt the guy was genuine and decided to play ball with him. He eventually made good, and then two months later fell behind again. We had warmed him that we would start evection proceedings were this to occur and would otherwise "encourage" him to leave. In the last week, of the notice period we gave him, he did about $3,000 worth of damage.

One person visiting from the States was considering buying a place at Los Jardines so that his wife could visit her family in CR. I allowed him to use a unit I owned for free for the week so he could check us out. In the last night of his tenancy, he racked up $250 worth of phone bills and split. Despite repeated promises to send a check, I've never seen a dime.

We had one person, who I knew to be very critical and acerbic tongued and quick with poison pen letters. In fact that is how I first met him —he beat me up over a statement I had made in my website. He challenged "... the soon to be completed new highway to the Pacific..." I accepted his argument and changed the statement to what it now is, when completed, the highway..." He and his partner moved into a unit at Los Jardines and used Los Jardines as a model of what they were building in Jaco. After a few months, his payment schedule became erratic; we pressed for payments and compliance with certain clauses of the lease. This resulted in a poison pen campaign designed to alienate us from other tenants and owners. After suffering three vitriolic letters filled with personal attacks, innuendos, and misleading information, I wrote those on his distribution list a fact filled, level headed non-abusive letter. He was alienated and ostracized from those he had sought favor. He made a midnight exit taking some things which didn't belong to him. He's still trying to develop his project with virtually nothing to show; I wish him well but I'm fearful for his investors.

One of our investor/purchasers claimed to head up a number of investor groups out of Florida. He bought two units which were to be used as model homes for his clients; he expected to buy more units and to partner with us in our next project. The clients never arrived. He was personally charming and very generous and certainly very easy to work with. A series of things started to happen which made me suspicious. I did a Google Search and found that he had been a bad boy in the 80s and had a prison record. In October he had been arrested for money laundering as well as several drug related charges in a DEA sting operation. He pledged property to raise bail —it seems that the property might not have been his to pledge, that he had taken out large mortgages on properties he didn't own, skipped town and had been arrested in Italy and last I heard is currently awaiting extradition to the US. I also understand that a number of civil actions are pending. Until the ownership is sorted out, we will continue to manage the two units and when ordered to liquidate by a competent authority having jurisdiction, will follow their instructions. One of the unfortunate investors was here this week scoping out the situation and I believe is satisfied that the properties are being leased and maintained effectively.

The most recent incident this past week involved a short-term lessee. The one month with option to renew turned into 12 stressful days. By mutual agreement, we terminated the relationship. At my wife's urging, I did a Google search on him and again found there are a number of people who have not very nice things to say about him and his business practices. When I informed the referral agent of our experience, I was advised that they too had had difficulty with him and had severed all relationship. We shared a mutual assessment of him and common opinion that he will not settle well in Costa Rica.

Conclusion: What have I learned? My old rule of thumb that most of the people are honest and honorable most of the time is changing to some of the people are honest and honorable most of the time. I've seen posts asking if it is o.k. to lease to Ticos... I don't have any experience but certainly it isn't a cakewalk with expats. Will we get better at selecting our clientele? I would like to think so but I'm not sure how, at this point in time-usually there just isn't much information on which to make an assessment. Will we be quicker to take action when we are concerned? Yes. We won't knowingly break the law but we are more than likely to go down swinging if diplomacy fails.

Sales: We're working our way through the closing process on 110 and 118.

Garden: For several years now we've been trying to grow pineapples. We've had to move the starter beds several times and each time took it's toll but we now have three pineapples budding and hopefully, more of the plants will follow suit. The professional gardener laughed at me when he saw that I had planted the tops of consumed pineapples. He said that the faster way was to pick the sprouts from mature plants and plant those. I didn't have any so had to go the slow route.

VOIP phone: We've experienced some reception problems this past month. We don't know what is different and why these problems started —it was working fine. Anyway, we have upgraded the upload portion of the bandwidth we purchase to see if that makes a difference.

OUR LIVES

Weather: Mostly cloudy in the mornings with overcast and rains in the afternoons/ evenings.

Hugo: changed his diet; still waiting to see...

Cars: T'was the week for car trouble: (a) locked my keys in the car; (2) the ignition mechanism failed, and (3) I met Lita and a friend of hers on the roadway standing beside her friend's car which had died as well.

Texas Hold'em: another round on Wednesday; good fun; we've had no winner win twice —eventually this will happen but so far, no one is dominating the game.

Weddings: There were two weddings on Saturday, one of which was conducted at Los Jardines.

Guests: we have a couple new to Los Jardines on site for a few weeks checking us out for a longer term commitment. One guest postponed her arrival because she hasn't been able to sell her motor home yet.

Brian, Lita, Hairless Hugo and irreverent Vicka, the pigeon toed parrot.

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