162 Understand the financing and loan options plus the process in Costa Rica

[Richard Bexon]
Good morning, Gabriel.
How you doing?

[Gabriel Guillemette]
Hello. Hello, Richard. Happy to be here.

Very good. Very good. Thank you.

[Richard Bexon]
Awesome. Well, I appreciate you coming back on the podcast. I know that we did a podcast a while back about financing in Costa Rica.

And we've actually worked together on on a few things here. Most recently, the purchase of a condo with a client of ours, but appreciate all your help. But I wanted to kind of just get you on here, you know, and get to go a little bit deeper and answer some of the questions when it's coming to financing to Costa Rica.

Definitely the market here is opening up to financing, as you can see, with, you know, guys like yourself, BAC, Lafice, BCT and other private loan companies kind of coming out of the out of the woodwork. So it's good to see, you know, because it kind of keeps the market kind of moving here, whereas before it was only cash. But well, Gabriel, my first question to you is, you know, I always like to get an update, you know, on kind of what you're seeing in the market from the volume of your own business.

Is it growing? Is it slowing down? You know, I mean, because you have the viewpoint of also North America and here in Costa Rica.

I mean, generally, what do you see?

[Gabriel Guillemette]
Yeah, it's it's still a very strong market. I think that people are just a little more conservative depending on where they're from, depending on the light of business they're in, depending if they have a job or switch jobs and so on. But the reality is that everything is still growing here, whether it's the construction.

I think that a lot of people are still wanting that little slice of paradise where they buy land and then, you know, being able to build on it, their dream home and so on. But on my end, I mean, just to answer your question real, real quick, it's growing. It's exploding even because the reality is that financing hasn't been an option.

Let's just put it that way. You know, apart from like vendor take backs in the past or buying cash or even private lenders once in a while. But now with the banks, as you mentioned, so clients are just eager to understand as well, because the process is it's literally, you know, backwards or black and white versus what we're used to seeing in North America as well.

[Richard Bexon]
So, yeah, I mean, if you were to compare what you're seeing in Canada, because that's where you're originally from, you know, with regards to volume of work, just I spoke to some people in real estate up there and they're like, wow, it's just it's a real slowdown, you know, developers, people building like it's like they can sense they're seeing that slowdown, you know, here in Costa Rica, are you seeing a slowdown from your business or is it still going gangbusters? I think you just answered that.

But I just wanted to kind of just see how the two compare.

[Gabriel Guillemette]
Yeah, no, it's actually it's very fair. And it's also nice because, you know, I have I obviously discuss with a lot of people, but development wise and different developers in the area here, what I hear from most Canadians, it's either or either they're just trying to find still like a second home or some place where they can just get away, because the reality is they can work remote and all that stuff. So the six month, six month type of snowboard snowbird situation or on the flip side, it's it's developers that are trying to put to diversify.

So they're trying to, you know, all their eggs in one basket in Canada is not working right now, because like you said, the market's going down. So the conversion rate hurts, you know, of course, from Canadian to USD. But in reality, it's more of okay, so we take that hit once we go to somewhere where it's actually growing.

And, you know, there's Costa Rica's full of land, it's more the fact of, you know, if they're willing to break their teeth, just to get going, you know, which is always the first the first couple of miles are always the toughest. Sometimes even farther down the road, it's still tough. But the reality is, you know, when you get through it, it's actually worth it.

[Richard Bexon]
So yeah, we've actually got quite a few Canadian clients, we're actually building houses for we you know, help them find the land and go through the whole process of design and building. So it's actually kind of nice. I think we're seeing an influx of Canadians moving to Costa Rica.

I mean, I'm seeing more demand from Canadians than I am from Americans at the moment for moving here.

[Gabriel Guillemette]
Yeah, yeah, I agree. Many years, of course. And it's, there's the cold part, but there's also the the attractiveness of being in Costa Rica.

I mean, the reality is, is Oh, my gosh, it's a I really like your expression, Richard. I mean, it's a slice of paradise, right? That's the reality as well.

So it's a dream of theirs. And then when they get here, you know, it has its other complications. But if you're adapting to the place, it's amazing.

[Richard Bexon]
So I always say to people like, look, you're just gonna have to go with the with the flow here. Like don't try and swim against it, because it will just drag you away. Just like it is what it is.

You're not changing it.

[Gabriel Guillemette]
Agreed. Totally agree. I keep telling that to people all day long, it's either you adapt to Costa Rica, because it won't adapt to you.

And it's like, I want to do things fast, fast, fast. And I can tell people there's three speeds, slow, slower, slowest. So don't, don't try to go fast, because it's not going to work here.

[Richard Bexon]
So yeah. And don't try and change it. That's the beauty of this place.

You know, it's it's different. So but are you seeing? Are you seeing?

Have you seen a change in your clientele buying in Costa Rica and working with you guys?

[Gabriel Guillemette]
I have actually because it's I find that the I'm sorry, I don't have the word in English. But in French, I have in French in my head, it's like the median, like age, the regular median age bracket, I find has dropped drastically, because people that just had example 100 200 or $250,000 cash, well, then they can actually or even $50,000 cash, now they actually have other options. You know, if you're looking to be on the beachfront in Tamarindo, of course not, it's not it's not something that's going to work.

But the reality is that even if you go a little more inland, in towards the mainland, the beauty now is that with financing options, and as you had mentioned, you know, the banks are starting to open up. So there's a lot of complications, which we can get to a little later. But the reality is that it's nice now, somebody that has, you know, that's 25 to 35, that year, that bracket that doesn't necessarily is not ahead in life, just like the 50 pluses, for example, they can actually afford now something here, because they have great jobs, they just don't have the cash to be able to put down, you know, three, four or $500,000.

So I think that's really cool, because it brings also an influx of younger kids, like younger, the newer generation or the next generation as well.

[Richard Bexon]
Yeah, I mean, look, I, you know, I mean, 20 years ago, I was with that generation kind of coming into Costa Rica, you know, but we were very unique. I mean, it was mainly, you know, retirees, snowbirds kind of coming to Costa Rica, not that many young people, whereas now, you know, not young anymore. But like, you know, it's, you're definitely seeing those, you know, people in the late 20s, early 30s, a lot of the time with families as well, not always, but that are just, you know, they've either they can't get on the property market, just because it's ridiculous, you know, so they're just questioning their, you know, where they're going to live and what they can do, because they don't need to be wherever home is, I mean, they can live down here and have a, you know, a Western style income. You know, or it's families just really questioning of like, do I want to bring my children up in this, you know, this environment, you know, in this community, and in this country.

And, you know, I think a lot of people are turning to Costa Rica, because, you know, we do have a lot of alternative methods for education and also kind of living as well, as well as just conservative, regular, I mean, we have everything here.

[Gabriel Guillemette]
Yeah, yeah, I think it's just a question of, it's always a question of what people are looking for. And this is ironic, because I always get this as well. I'm sure you get it too.

Oh, Gab, I'm gonna, I'm gonna go visit Uvita, as an example that I get very often. And then I'm gonna visit Tamarindo, which is great. I mean, don't get me wrong, it's two great destinations.

It's just, it's literally at the opposite of the spectrum. So accessibility, getting there, the services, you know, very, very different. But both of them have super amazing advantages and have the downside, depending on the region, right?

So yeah, I agree. From there, it's mainly understanding how, how the little I think you had last, last time as well, like the little ecosystems in the different parts of the country, which people don't necessarily understand until they've actually lived it. So that's, I think that's a big, big part.

But you're right. I mean, schools, whether regardless of the region, there's amazing schools everywhere. Everything is developing.

I mean, the infrastructure, I give you a real, real life example. You know, I've been here for two years, literally in four days, it's going to be two years now. And the reality is that two years ago, cutoffs on internet and electricity was like a daily thing.

Not, not huge, just little tick, ticks, tick, ticks. But now I think that the last time we got a power cutoff, like an actual cut of over, let's say half an hour, it's been like four or five months. So just the infrastructure that the government is putting into place, because they know lots of people want to move.

Lots of people want the amenities, want the fiber optic internet and so on and so forth. So it's developing at a rapid rate. And, you know, it's just sometimes a little, the little engine that could and Costa Rica is getting there.

So we've got to give them a chance as well.

[Richard Bexon]
And a lot of that infrastructure is coming from private, because again, when you want, you know, I think it's REMV in your guys' area that do the, or re.com or someone does a lot of the fiber optic internet there. I mean, you know, the individuals have to pay for the line to be thrown or, you know, I mean, with regards to the electrical infrastructure, you know, if someone's doing a commercial project, you know, they have to put the infrastructure in place for water electricity sometimes, you know, which helps out everyone. So, I mean, it's great because again, you know, as I always say, when the boat, when the, when the tide rises, all boats ride.

So it's great for everyone.

[Gabriel Guillemette]
Yeah. Yeah. I agree.

And that's the, one of the beauties where it's like, even if you don't want to cooperate per se, just like you mentioned, you kind of have to, because he say, which, you know, they, they take care of electricity here. Well, then you have to bring the electricity, you have to bring the water, you have to bring the services. So as a developer, you know, it's, it's sometimes not something that we're used to seeing in Canada, because we just plug, Oh, there's the power line.

That's it. That's all here. It doesn't work that way, but it creates that nice bond where, you know what, you have to go through it anyways.

[Richard Bexon]
Yeah, I agree. Well, let's just, you know, change gears here and get into financing because it's really kind of the, the meat of this podcast. Maybe you can give listeners an idea of the financing options available to them in Costa Rica.

[Gabriel Guillemette]
Yeah, for sure. I mean, it's still, there are many programs. It's just, it depends on what the clients are looking for.

And like I tell everybody, it depends on your objectives, right? I mean, if you're looking for a short-term loan, because you're looking to sell your house, for example, sorry, you're looking to build your house and then sell it the next six to 12 months, you know, maybe going towards the private lending would be a better alternative than if you're going towards a regular mortgage, because there's closing costs, then you sell, then there's more closing costs and so on.

So it might not necessarily be like I say, a sexy option, but that's an option as well. But if we go towards the banking options, you know, regular mortgage refinancing, it can be a cash out refinance as well. And we have construction mortgages that, that come into play.

Most of them have different rules and regulations, depending on the banks, depending on what the, how aggressive a certain bank wants to be during the specific week. So if I just take a little step back on this, the prime rate here changes every week. So on Wednesday at 4pm, the prime rate becomes fixed for the following week.

So from Wednesday to Wednesday, based on the US dollar, of course. So there's the Colones prime rate, and then there's the USD prime rate. So if we go base it off of that, it's kind of different than what we're used to, firstly, and then depending on how aggressive one of the banks want to be, because some of the partnerships that we have, as an intermediary, you know, kind of like a mortgage brokering service, you know, some banks example, back one week, we'll want to be really aggressive, hit the market, take the spread they usually take. So let's say easy example, prime rate is 5%. The spread would usually be four, maybe they're going to take a 3.5. And then they're going to modify a little bit their terms and conditions to try and attract more clients. So it happens, it's not super common, but it happens. And if not, you know, generally speaking, from there, if you're going for a regular mortgage or refinancing, the package deal is going to be similar terms, conditions, which I'll get to in a sec. And then the construction mortgage is going to be slightly different where, you know, the amount that can be lent is going to be much higher, because the reality is that the client needs to own the land.

Yeah, so the land part is one of the most important parts, which we'll get to in a sec, I'm sure. But the reality is as a construction mortgage, as long as you own the land, then the bank will lend up to 80% of the construction costs based off of, once again, construction costs, disbursement schedule, and so on. Versus if we go directly with the mortgage and refinancing, those terms and conditions are, you know, 99% the same, where the loan to value, so depending on the appraisal, that's going to come back, the loan to value can be anywhere between 50 and 70%, depending on the banks.

And then the interest rate, obviously fluctuates, but in reality, we're anywhere between 8.25 and 9% at this time, depending once again, on the bank, depending on the prime rate, I think this week, we're like 8.62, or 8.72, something along those lines. So that's the reality. And then from there, the term slash amortization.

So for the Canadians out there, the amortization and term here is the same. There's no, because in Canada, it's a 30 year amortization, five year term, as an example, and then you have to renew your mortgage. That doesn't exist here.

It's like in the States. So let's say the regular classic is 15 years. And depending on the financials and the credentials of the clients, we can go up to 20 years.

We're working on 25 with certain banks, but we're just not there yet.

[Richard Bexon]
Yeah. Well, I mean, I think that's like one of the big things that a lot of people find hard to understand here, and maybe I'm about to cover like a subject here is valuations of properties in Costa Rica. You know, it's not like it is in North America where, you know, they look at comps and like, you know, those things here.

It's, it's literally of like, how much would this cost me to rebuild? Right. Can you hear me?

Okay.

[Gabriel Guillemette]
Sorry. Yep.

[Richard Bexon]
No worries. No worries. We'll just cut that bit out.

So I'll just start the question again here on. So I think one thing that a lot of people need to understand here, the big thing that really is a surprise for people is the valuation and how that works here, because typically, you in North America, you know, people are looking at comps and market value, whereas maybe you could just explain here how evaluation happens here and what's the difference.

[Gabriel Guillemette]
Yeah, no, totally. That's, that's a big, the lingo I use with the clients is that that's my wild card because you never actually know. And that's, it really sucks to say, but it's also the reality as well.

So in Canada, just like Canada, the States, et cetera, like you said, MLS comps, you know, comparables and so on and so forth in Costa Rica, there's two different methodologies. So the first one, let's go, we're going towards a regular mortgage or refinancing. The lot will have comparables.

So they use three or four different comparables and they then obviously make a, an average of that and so on. So that's okay. The houses though, since there's no real MLS system, that's where the wild card comes a little more into play.

So we have, and it's, you know, sometimes it comes back really, really great. Sometimes it comes back a little less great. But to be very frank, if I compare, for example, a year and a half ago when I started this, I mean, the comps were, the comparables were horrible because they were basing it off of data of like five years ago and plus, whereas now the companies that we use, because it's always very company based.

So some of the companies, you know, we used to use six different companies, four of them we decided not to use anymore because the employees there were, and it's no offense to anybody, were a little older. So what happens is that they weren't using the comps of once again, three, four, five, 10 years ago, which didn't make any sense because the last two years, as I'm sure, I'm sure you're aware are, have been going like this. So when we put that into perspective, we use two different companies that are accredited by the banks and so on and so forth.

And the comps have been coming much, much better, even sometimes slightly higher than the actual sales price. So that's something that's really sexy now, but it's still, you know, I've still seen some appraisals for a house, $350,000. The appraisal comes back at 280 and nobody understands why.

So then we get a second appraisal, which at the end of the day, and I'm being, you know, obviously very transparent in this, sometimes we'll have to send a second appraiser and then that one's going to come back and it's going to come back at 375. And we're like, okay, we're going to use that one because that makes so much more sense. So it's, it's always a little bit of a wild card.

So we're hoping, but depending on the area, you know, if you're downtown Tamarindo, no problem. If you're in Uvita, no problem. If you're in like Samara, you know, no problem.

So those like core center places, but then you go to places that have been exploding in the last two years, you know, example in my region, which is south of Uvita, even Dominicana, north of Uvita, we take, for example, Potrero, Flamingo, you know, I've seen, it was always a nice hub, but now it just exploded. So those are still sometimes a little lacking when it comes to the appraisals, but so that's one piece. And then the second piece is like when you take a construction mortgage, the reality is that the land price, yes, it's going to be added into the, in the appraisal, but the value of the land is not going to be a big, big factor in that appraisal because the reality is that the bank is going to lend upon the construction.

So there's probably like a 5, 10% of what the land is worth. And then the other 85 to 90% ish is going to be towards construction costs. So if you're building a $300,000 house, well, then you know what, on a hundred thousand dollar property or on a $1 million property, the reality is that it's not going to make a massive difference where the house is located versus once the house is completed, then we're in a whole different bracket.

So.

[Richard Bexon]
But then is getting a loan on pre-construction, like building something a little easier because of the valuation is very easy to do because you've already have the like, Hey, here is my contract. Here is how much it costs to build. Like there's no real question over like how much it costs to build, like it's replacement value.

It's like, I'm building this for $500,000. Like that's how much it's worth.

[Gabriel Guillemette]
Correct. Correct. The building costs.

And this is where it gets a little, we get different opinions because if you're looking on the client side, yes, you're right. Totally right. If you're looking on the developer side, well, the developer, if he's, you know, $500,000 is the construction cost.

He's not selling it to the client at $500,000. Let's be very honest. Right.

It's not a profit. So this is where the discrepancy, sometimes the clients are like, yeah, but the sales price is as an example, 600. Yes, my friend, I agree.

But the reality is that the constructor is not going to sell you at cost. It doesn't make any sense. So that's sometimes where I get a little bit of a flags from clients and they tell me, yeah, but yes, but you know, there's also profit in this.

[Richard Bexon]
And then is the lot included? Is the lot not included on a development, for example?

[Gabriel Guillemette]
But yes, you're correct. The reality is that it's much easier to base.

The fluctuations are a lot less when it comes to a construction mortgage because, you know, if it says 500, they're going to be more or less maybe an extra 20, 50k up or down because some contractors, you know, sometimes they're going to boost the prices a little bit, let's be frank. So that's one of the realities as well.

[Richard Bexon]
Yeah. Yeah. I mean, it's interesting, you know, I mean, that's why with us, when we go out to actually bid, you know, we bid with five different companies, just so you can see that spread.

And that spread is pretty big sometimes. I mean, like it's incredible, you know, and I just can't believe I've seen sometimes where people have, you know, just got one bid or their architect has gone, Hey, here's the construction guy that you need to use. And it's like, well, you've just really have no idea of where you stand in that spread, you know?

So it's always good to get comparables. You know, I mean, it's typical, like get three, uh, we do five just because from five, we get down to three, you know, and then from there is that we can analyze a little bit, but I think it's definitely important, especially here in Costa Rica is to really analyze, you know, that those construction, because you can save yourself hundreds of thousands of dollars sometimes.

[Gabriel Guillemette]
Literally. I mean, I totally agree. And I see this all the time as well.

Right. Um, the, the, it also, uh, I'd like to add a little, little piece on that just because it also depends on if you actually want to work with that construction group, because if you're trying to limit yourself or you want that, you know, I want this crew or this architect or this, well then obviously they know as well. So they're, you know, they're going to, they're going to boost the price a little bit because they know they have you in their pocket in brackets once again.

So that's something to take into consideration as well, because, uh, and last little tidbit on this is, you know, do your research guys, because you're going to have a construction crew that's going to come in. They're going to tell you just as a easy example, 80, 80, that $80 a square foot. The other one's going to come in 150, but the one at $80, I mean, it's going to be, you know, half the crew is not going to show up and it's the materials are not going to be good.

And then the house is going to be like the tower of peace. I mean, you're going to look at it, you're like, oh, okay, well you get what you paid for as well. Right.

So.

[Richard Bexon]
Yeah. I mean, look, this is not a country to just kind of, uh, you know, do things lightly because there is no recourse here as well. I mean, like if something doesn't get done, like good luck suing or like, you know, someone says, I'll sue you investor.

You kind of giggle. Uh, you know, cause it'll, it'll probably cost you just as much the construction to try and sue someone. So, um, but, but I mean, let's just jump back into kind of like what you guys do and what makes you guys different.

I mean, why would someone go directly with you guys rather than going directly to a bank? I mean, give us an idea of, of, of kind of how your business works and what are the benefits of working with you guys?

[Gabriel Guillemette]
Yeah, totally. I actually get this all the time and the we're kind of, we are, we often get tagged as mortgage brokers, but the reality is that we're more financial facilitators, right? I've been in the financing space in Canada and now here for the last little close to 10 years now.

So I understand the market. I understand how it works. I understand the financing.

I can be pretty creative. And the beauty is that we don't have, we're not a bank where, so these are your options and that's it. We actually have a multi, we have multiple options, so different types of programs.

So if you're looking to, you know, facilitate, for example, uh, retirement funds, we don't do it us per se. We just facilitate it and make sure that everything is smooth, clear, transparent, which is oftentimes what is lacking in this, uh, in this country when it comes to the financing space, because it gets very, it's very taboo. So, uh, one person's going to tell you one thing and another, another thing and so on and so forth.

Uh, or if you're looking, you know, uh, we call it the home loan program, which is like government Costa Rican government backed. Uh, or if you're looking for just a regular mortgage, regular, uh, refinancing, we have those as well. And then, you know, I have connections with a couple of different private lenders, depending on if you're looking to, you know, do a flip or you just want the money, you know, cause I get clients that I need the money in three days.

My friend, if that's the case, we're not going with the bank ever. I mean, there's no way. So that's also a reality as well.

[Richard Bexon]
I mean, how long does the process take from start to finish? I mean, if someone has something today, you know, and they're looking to purchase it, you know, they're putting together a sales purchase agreement, they're going to get financing. I mean, how long should that they, because a 30 day closing is not probably happening either.

Right.

[Gabriel Guillemette]
No, agreed. I mean, the reality is, uh, pessimistically two and a half months, realistically two months. And if everything goes well a month and a half, that's the, you know, the best timeframe I can give you is that, and the reason is there are multiple reasons, uh, just like we have seen in the past as well.

Uh, you know, there's a document missing or the client for whatever reason. And this is also very truthfully the client, um, a big piece in the beginning is on the client's shoulders. So Mr. Klein, give me all the documents. Two days later, I get a document three days later, four days later, I just spent two weeks and that's the reality. So it's something that I don't control. Uh, on the flip side of the appraisal, let's say it takes usually three to four weeks, but, uh, for people that don't know, I mean, there's always, there's every second week there's a holiday here.

So, I mean, there's always something happening. There's always a day off. There's always a week off.

There's always something. Um, the person that's supposed to take your file for calls in sick. And then, you know, a company has maybe 10 employees, but that employees was the only one, uh, uh, associated to your file.

So he's been sick for two days because of his kids or whatever. That's also a reality as well. Right?

So that's why if everything goes really well and everybody is like on as clockwork a month and a half, which it happens, but it doesn't happen very often. The classic is about two months. And then, uh, sometimes we'll have to strip at the stretch and then, you know, ask for a little extended extension to get up to two months, uh, two and a half months because of once again, holiday, um, at the incorporation that we thought we were going to use for the client is, is incorrect.

It needs to be corrected, transfer this and that, or client is trying to transfer money into the country due diligence on his money. So, um, uh, fund, uh, the fund verification with the escrow account takes an extra three, four days, you know, all these factors come into play, which we're like, right. I mean, what are you going to do?

So just swim with the current and just go with it. Don't fight it. So the reality is that, you know, at the end of the day, we're here to help.

We're here to, you know, as I like to explain to people, I'm a very, no nonsense, no, no bull crap type of person. This is what we do. This is how it is.

These are the fees. This is how it's going to end. Um, if you're able to fulfill these steps prior, and then from there, some clients want to get a little more creative where they're going to use a piece of their retirement funds and a piece of financing with the bank, or then mommy's going to come into play as well.

Or, you know, this is where, uh, having the right set of tools, AKA the right team, uh, makes a big difference because everybody can do it on their own, to be very honest, very frank. If you, Mr. Richard, you walk into a bank, you go to a specific bank that offers financing. You could.

The, the, what I've seen so far, and I mean, I went through the process just out of curiosity. I didn't get to closing because I just wanted to see the reality is that if you go with the banks and I'm going to be generalizing, of course, uh, cause I take, for example, banks that are BAC or BCT, they just literally started their program. So when a client goes there, you know, they're trying to pass the client through the pipeline through the flow.

And Oh my gosh, is it gruesome? I mean, it's, it's the documents are all in Spanish and then they send it to the client. The client makes a mistake.

That's going to pass through 22 different pairs of hands. You're going to get 22 different versions. And then it's going to come back to you and there goes two months.

Uh, or what I've seen with some of the banks, which is kind of unfortunate, but the bank has the big end of the stick, right? That's the reality as well. So three days before closing, you know what, they're going to tell you the LTV.

So the loan to value is not 70% anymore. It's 50%. And you're like, but guys, I'm closing in three days.

What am I going to do? And the bank says, you know what, these are the rules because things change because of the government decided to versus if you go through us, the program that we have, depending on what, once again, the client's priorities, uh, sets things straight as much more streamlined as much easier because we know from day one, unless, you know, the prime rate decides to go from five to 10, which is something obviously we don't control.

If we say your LTV is going to be 60%, as an example, it's going to be 60%. So that's also something obviously based on the appraisal, just to make sure we, we talk the same language, but, uh, you know, we're here to help. We're here to facilitate it.

Uh, you know, sometimes I get as pissed with the clients as they are. The reality is, you know what the bank is not giving any answer and it's been a week. Yeah.

But you know what, it's a process that takes two weeks where I'm not going to get an answer before those two weeks are up because that's how the bank works. So just like you said, right away.

[Richard Bexon]
Yeah. I mean, I think where you guys can add a huge amount of value is facilitating that conversation with the banks, especially, you know, because again, finding someone that speaks English in a bank that really understands, you know, North American lingo and also financing is, is, is difficult. But I think also when you're starting to bring in a variety of different sources to the financing as well, you know, when you're leveraging, you know, 401ks or something like that, you know, and you're leveraging other bits of assets, I mean, bringing that all together, I think can, can you guys add a huge amount of value in that, you know, as well as just facilitating stuff with the banks here.

Cause as you said, yes, you can go into these banks directly on your own and you can do it, you know, but like you better be on this every day.

[Gabriel Guillemette]
And, and the terms and conditions are slightly different as well. Right. I mean, the beauty with us is that since we're, we're, we're funneling quite a lot of clients to the different banks or different partners.

The reality is that if you, example, Richard, were to walk into a bank, well, I guess you're a resident, so it's a little different. Let's say walks into the bank. The reality is that the, the, the spread, for example, just as the, the, the interest rate, instead of being 4%, it's going to be between 4.5 and 5%. So you're going to have extra interest to pay on your loan. There's also like the, the terms and conditions. Once again, when it comes to the LTV, the length, so the amortization, it might be less because you know what, you're going directly with the bank and I'm generalizing here, but because it's literally, there is not a golden rule for everybody.

It's a case by case. So you can have the exact same case as the other, but because of where you're from, because of your credit score, that's slightly lower or whatever. I mean, the bank is going to be, is going to be analyzing your, your file a little, a little differently as well.

[Richard Bexon]
So my question to you is, which is probably the question that a lot of people are asking here is, how do you guys make money or what are the costs of dealing with you guys?

[Gabriel Guillemette]
Yeah, no, it's a good question. The, our mission to make it very simple is like, you know, we want to democratize the lending space. So we're here because we want to try and make, render it accessible to everybody.

And so we have a file opening fee in the beginning, which that is going to be used of course, to actually get the process going on our end. And then from there on the backend, we take 1.55, which is added to the closing costs. So 1.55%. So we're not very, very frankly, I mean, when you look at the lawyer closing costs and, you know, with the properties and this and the taxes and the stamps and this and that, we're actually a very, very small piece. And I get, you know, to be very honest, I often, oh, you're, you're very cheap. Yeah. But the thing is that if I add, let's say I put 3%, the reality is that the client has to pay that 3% because the banks here don't give at all any kickbacks because they don't really care.

So it's something that I, you know, we don't want to add extra weight to the clients. We actually, you know, the more clients that come down to Paradise, I mean, the better it is for everybody as well, but charging extravagant fees just at the end of the day, it doesn't make any sense either. So.

[Richard Bexon]
Yeah. The question I've started to ask people recently, because a lot of people are starting to move down here and go, you know, what am I going to do when I get down here? What do you think the businesses or services that are missing in your area of the country?

Because you're in the South Pacific area there, if I'm correct, so, I mean, what are those between Uvita, Tres Rios, you know, all those areas, what is the business that you think is missing? That's not, somebody mentioned the other day was an automated carwash service, but that's not an automatic carwash service.

[Gabriel Guillemette]
Yeah, no, that's, that's a good, it's a good question. It's kind of funny. Automated carwash service where, you know, quite frankly, I mean, it's going to cost you very, not much more than what we're used to.

Let's say in Canada, I get automatic carwash, it costs you what, $5, $10. I mean, reality here for 5 mil or 10 mil, which is going to be $10, $15, your whole car is going to be spick and span. So the reality is it's not comparable.

But yeah, no, I think it's in my area, it's the entertainment because, you know, you go to Guanacaste, the San Jose, you have all the entertainment and I'm not talking entertainment, like, you know, movie theaters and stuff like that, which would be great. But the reality is, you know, there's a lot of kids, a lot of families moving down here. And at the moment, actually, a funny story is spearheading a project for a whole communal park with a little skate park, water pad, a little like a gastropark for food and stuff like that, because it's the type of thing that we don't really have down here.

So there's a lot of families moving here. There's a lot of people that get together, but it's oftentimes we just get together at people's houses or the community building. The parks are not super present.

There are very small parks. So it's all those things where, you know, you want to go with your kids on a Saturday afternoon. It's like we have a miniature water park, but it's which is great.

I mean, don't get me wrong. It's better than, you know, six months ago when there were no options. But having something that's towards the entities, towards the families, you know, like getting together or like even restaurants here.

There are quite a few restaurants. But the reality is that with the number of people that are moving here and my wife and myself, you know, we want to go for a little fine dining and leave the kids with the babysitter. You know, there are a couple of options which are really, really great, but it gets a little redundant because there's like four or five, six places.

So adding a little more variety because it's oftentimes the, you know, for the people that don't know, like sodas, you know, like the little deli type of places, there are boatloads. They're everywhere, which are great. I mean, it's great once in a while, but rice and beans all day, every day, it's not the type of thing that I'm going to eat.

So. Definitely.

[Richard Bexon]
Yeah. I mean, you know, one of the things that jumps out to my mind is a toy shop. I don't know if there's a toy shop up there, but I mean, you know, if there's kids, they're going to have birthdays.

Like where do you get toys from?

[Gabriel Guillemette]
Yeah. Yeah. No, I agree.

I mean, the grocery stores are here, the BNs that we call. So the grocery stores, they have toys. There are like little.

Pockets of it. Yeah. Like little dollar store type of type of things where you have like everything.

So you got like paper stuff, you have the toys you have, et cetera, et cetera. So it's really great. But at the end of the day, the options are very, very limited when it comes to that.

[Richard Bexon]
So awesome. Well, my last question for you, Gabrielle, as I've kept you long enough would be again, if you inherited five hundred thousand dollars and had to invest it into a business or real estate in Costa Rica, what would you do with it and why?

[Gabriel Guillemette]
Yeah, great question. The. I mean, real estate is still going to go, it's still going to go strong.

You can't you can't go wrong when it comes to real estate, unless you get sorry for the term and screwed over. So do due diligence and all that stuff, of course. But the reality is that the Airbnbs are going to keep renting.

People are moving down here. So whether it's short term rental, long term rentals, you know, it can be in the financing space as well, meaning that I think that there are with some co-op alianza, for example, if you just want to place the money, they give good interest return, good interest as a return. I mean, there's are there are other types of programs and projects and people that they can use the funds as well.

If you just want to be like a passive investor, that can also be an option as well.

[Richard Bexon]
What would you do? What would you do with it? I mean, you've got five hundred thousand dollars.

[Gabriel Guillemette]
Yeah. Personally, I put it into two different houses. Right.

I mean, the reality is that with two hundred fifty thousand dollars, you can build in my area anyways, you can build some pretty nice houses, two or three bedrooms. And then the price point at which they're going to sell, you're going to make a very decent ROI on it. So, I mean, that's what I would do, even as a short term rental.

I mean, you put the money in, your ROI is going to be a couple of years, of course. But the reality is that you're going to get some good, good cash flowing from there. And, you know, if not, the last one would probably be like just a find exactly what the community would like.

Example, you know, you're opening up a toy shop here. OK, perfect. The price point.

What do people like? What are people looking for? Opening up this type of business where you're filling in the gap, I think is going to make it's going to it's going to be huge.

[Richard Bexon]
So I agree. I agree. Well, Gabrielle, it's been absolute pleasure having you on the podcast.

I really appreciate you coming on, talk about your business and also giving people advice and just really educating people on financing in Costa Rica, because, again, it was something that was not really available, you know, even five years ago, even three years ago. You know, and I think it's it's great to see that, you know, and anyone that wants to get in contact with Gabrielle, I'll put all of your contact details as well as your website in the description. But appreciate you coming on the podcast.

[Gabriel Guillemette]
Thank you. Thank you so much, Richard. And questions, comments, people feel free.

I mean, we're here to help. And if we can give you a hand, make sure that you can get your own slice of paradise. We're all here.

[Richard Bexon]
So awesome. Thanks, buddy.

[Gabriel Guillemette]
Thanks. Bye.