In this March, 2013 article for The Howler magazine, Pueblo Verde Developer, Tom Peifer, provides a guide to buying real estate in Guanacaste.
Sweet Talked, Short Changed and Locked Out
Stranded asset is a financial term that describes an asset that has become obsolete, or non-performing, but must be recorded on the balance sheet as a loss of profit. The term has particular relevance to pricing long-term economic and environmental sustainability. – Wikipedia
As a kid, I had no idea what a real estate scam was. Nonetheless, as it turns out, growing up in Southern California, we drove by them all the time. My parents even bought up a bit of an over-hyped project that had gone bust long before I saw the light of day.
In truth, scams, rip-offs or just promoting way more than you can deliver is a bit like bio-diversity. Comes in all shapes, sizes and colors and tends to flourish in certain kinds of environments. Southern California, with its vaunted reputation for orange blossoms, balmy weather and the deep blue sea, was in many ways the perfect setting to hype the dream, lure the unwary and sink the hook.
The land my folks scooped up at fire-sale prices was a classic example. The ‘lots’ overlooked the shore of Lake Elsinore, the largest natural lake in the drought prone southern part of the state. The area was a perfect escape from the hustle-bustle of LA, yet far enough away to be sold off to people who had no way of verifying the details, like the roads, water, utilities. Or when, in one of the periodic dry spells, the lake ran out of water. Two images were etched forever into my ten-year old mind: A Mississippi river boat-style vessel stuck at a bit of a
starboard tilt in the hardened clay of the former lake bed and the vaulted arches encasing ornate, rusted wrought iron gates, leading into a maze of streets bisecting barren fields full of tumbleweeds—no electric lines, no water, no homes. As they say in the movies: “Fast forward to the present…”
“The present”, for me, has been a 20 year long series of flashbacks to the rusting gates, abandoned projects, and dashed hopes and dreams that I first caught a glimpse of in my youth. Just as the sharpies in LA contrived to package the allure of orange blossoms and sunshine to the huddled masses yearning to breathe fresh air and work on their suntans, the sophisticated promotion of Pura Vida has led to a plethora of graceful gates, superb web
sites and an increasing number of disappointed buyers, left “high and dry” like the riverboat in the cracked mud of Lake Elsinore a half century ago.
After hearing a couple dozen complaints—ranging from “no road to my lot”, to “no water, power, bridge, etc.”–I once wrote an article encouraging buyers to do their homework, to look before they leap. In retrospect, perhaps due to a personal affinity for detective novels,
I encouraged people to sleuth around, to become sort of Ace Ventura Real Estate detectives, to look for the clues that would provide evidence as to whether their investment would simply become yet another ‘stranded asset.” This time around I decided to consult a real pro, a guy who works with a project that has delivered on their promises, helped people relocate from projects that failed to deliver, and who helped me flesh out a list for buyers
who want “mas Pura Vida y menos pesadillas” (More Pura Vida and fewer nightmares). Following is his ‘hit list’ with comments or illustrations from my own experience.
- Clean Title
My only observation here is that they don’t make Aspirin, Tylenol or any other remedy in big enough doses to alleviate the headaches that result from dealing with the courts, the banks and the lawyers when the deal is not squeaky clean from the start.
- Water Supply
As Mark Twain observed “You only appreciate the value of water when the well goes dry.” Remember, Guanacaste is a seasonal desert. Nothing beats a big tank, brimful and uphill from your home, ‘cause when the power goes out, gravity keeps on working.
- All Infrastructure in Place (not just a gate)
Trust, but verify. No amount of hand waving, Pepsodent smiles and good intentions can ensure that the money you invest will deliver the goods—and the utilities–to the land where you’re dreaming to live.
- Functioning Homeowner’s Assn.
Who are your future neighbors? How do they get along? How do they work out ‘issues’ that come up? If they can’t agree on budgets it can affect levels of maintenance and the livability of the project. There simply has to be sufficient funding and staff to guarantee that your investment won’t become a ‘stranded asset” and a broken dream.
- Quality Road Access
Most visitors have no inkling of the flurry of road repair that goes on as ‘high season’ approaches. Potholes filled, gullies smoothed out and washed-out stream crossings rendered passable once again. I know one developer who restored a blown out culvert at least twice and finally left the property owners to fend for themselves when the raging current gets knee-, waist- chest-deep on the way to their ‘dream homes’. The local record belongs to the ‘development’ that lost 7 stream crossings in one rainstorm. Less than a mile from where I live there are two homes, abandoned and rotting away up in the hills. The so-called ‘access’ road is impossible to navigate in the worst storms. Further up the valley, 250 yards of hillside roads caved in to the law of gravity rather than supporting the needs of the developer to provide his clients with the obligatory slice of ocean view. Put another way: some of the main roads, both county and national, become impassable at times during the rainy season. Is the project you’re looking at able to guarantee that you can get in—and out—when the heavens open up and all hell breaks loose?
- Proximity to Businesses – restaurants, supermarket, mechanic, doctors, hospitals, banking, etc.
The bottom line: how far do you want to drive for a six-pack, a bag of coffee or an aspirin? And how much of your life do you want to dedicate to living like a modern day Mad Max Road Warrior?
In fact, the ‘hit list’ provided by my friend went on to include many intangibles like “sense of community”, “connection with local culture” and a “shared concern among residents for the natural world that surrounds us.”
Pardon me for returning to a favorite theme. There’s a world of difference between “on line” and “on the ground”. The Internet provides unscrupulous promoters with a platform beyond the wildest dreams of the hustlers in Los Angeles early in the last century. The problem with ‘virtual’ is that it’s hard to verify. And that’s why you want to learn everything about the good, the bad and the ugly before you buy a ticket and take a seat. Your dreams may not
include a supporting role in the ongoing tragi-comedy: “Pura Vida Goes Belly Up.”
In parting, as they say, let me clarify one point. The purpose of this piece is not to scare people off from the dreams of having a home here, nor to dissuade the careful consideration that an investment at this point in time can be a smart move financially. I just feel that the more information people have, the better choices they make. As every business knows, a satisfied customer is the best PR there is.
Tom Peifer is an ecological land use consultant with 18 years experience in Guanacaste. 2658-8018. firstname.lastname@example.org
El Centro Verde is dedicated to researching and promoting sustainable land use, permaculture and environmentally sound development http://www.elcentroverde.org/