187 Steel Structure building in Costa Rica

[Richard Bexon]

Good afternoon, Andreas. How are you doing? Hey, Richard.

I'm great. How are you? Very, very good.

Again, I think we're both chuckling here because we just did a podcast that I forgot to record and now we're redoing it. So I profusely apologize. I say I do it every one one in every 100 episodes.

Yeah, no worries. It was my first podcast.

[Andres Osbourne]

So this is this is my second one.

[Richard Bexon]

Wow. Fantastic. Well, let's get straight into it.

I mean, you know, 2023 was rising interest rates, inflation, you know, the U.S. real estate market, you know, some what on a downward turn here in Costa Rica has been on an upward turn. Markets seem to have stabilized at the moment, you know, the start of 2024. But I mean, how are the volume of your inquiries and work being in 2024, if you don't mind me asking?

[Andres Osbourne]

Yeah, well, our work volume has been high, mainly because of three big projects that we started in the last semester that are still ongoing. Well, in fact, we just finished one of them, the Ritz-Carlton in Papagayo, where we installed 300,000 square feet of structure. So this and the Waldorf Astoria and the Inputacaziquen Solaris in Conchal all at the same time made us increase our capacity last year.

Our headcount in the office doubled to be able to match our capacity with our work volume. And I can say that in the last six months, we were focused more on our execution than in increasing our sales. And well, that said, the inbound inquiries this quarter have been similar to last year's first quarter.

We expect this year to continue as good as the last one. Most of the projects we're involved in are from foreign investments. So we expect that to continue this year.

[Richard Bexon]

Oh, man. Yeah. I mean, look, I mean, we're kind of seeing kind of a little bit of the same.

I mean, we're crazy busy here, but I can say in general, things are a little slower than like the craziness of 2022, 2023, but definitely much higher than 2019. And I think foreign investments can continue to pour here into Costa Rica, especially with the political climate in North America as well. I think a lot of people are looking to diversify a little bit outside the U.S., even a little bit of their portfolio. And Costa Rica is a very good and safe place to do that. So, yeah. I mean, maybe you can explain to us, you know, kind of what Biltec is, what projects you guys worked on, because you mentioned three very large projects there, but you guys do smaller projects.

I mean, give me an idea of what kind of projects you guys work on.

[Andres Osbourne]

Yeah, sure. Well, Biltec is a vertically integrated company that designs, manufactures, and installs panelized cold-formed steel structures. For those that are not familiar with construction, it's like wood framing, but with steel.

And instead of being stick-built, we assemble all the wall panels, floor joists, and roof trusses in our production facility. So what we do is known as panelized steel framing, and our goal is to make construction better by making the process faster, more predictable, and cost-effective. We chose steel framing to do this because it allows us to assemble all the components off-site in a controlled environment where you can have, of course, better quality assurance, can compress the construction schedule, and also reduce the labor needed.

And this is really important in Costa Rica because it's getting harder to get labor now that there's a labor shortage in the U.S., you know, and many workers from here are moving there because they can earn five times what they earn here. And so Biltec has 11 years in the market and has delivered over 300 structures. We started with single family projects 11 years ago.

You know, in Costa Rica, the traditional system is the regular block construction, so it wasn't easy at the beginning because we had to go against what was normal here. Our first clients, in fact, were the technology advocates who believed that technology should improve construction and wanted to give it a try. And also, of course, the foreigners who were familiar with light construction.

And since then, we have developed the skills, the team, and the know-how that allow us to be involved in bigger and more complex projects, like the ones we're talking about. And the culture here has changed in the last years, and Costa Ricans are more familiar with light construction. So I can say that things have aligned for us.

And, well, maybe I can mention some of the projects we've worked on. We, well, we were with Skeleton, Waldo Pastoria. In those projects, our scope was only the roof structure.

And we also are working, we're working in Solaris Punchal. That is a project that consists in four buildings, and we are installing the structure of the penthouses and external walls in all the levels. And, well, these are non-typical projects for us because most of the time, our scope is the complete structure, you know, the wall panels, floor joists, and roof trusses.

And maybe some examples of these projects are, in Zapotal, we're working in the many structures for the back of the house. We built Journey School in Huacas. We built 97 houses in Blanco Tambora, named Brisa del Mar.

We did that, Turnkey. So in this project, we could prove all the benefits of using steel framing, you know, because we were involved in the complete construction process. And steel framing is very flexible.

We've been involved from high-end houses in Papagayo to simple regular houses, mid-rise residential buildings, schools, warehouses, supermarkets, commercial projects, everything, yeah.

[Richard Bexon]

I mean, how much quicker is it to build with you guys than doing regular? And how is the cost compared to building, you know, with regular, with brick and concrete here?

[Andres Osbourne]

Well, you know, when a regular construction here, a house, can take you eight months, ten months. And I can say that with steel framing, you can save half the time of the, how do you say what it is?

[Richard Bexon]

Oh, the, I mean, well, basically the shell, right? The gray, the gray work, gray work.

[Andres Osbourne]

You can save half the time in the, in the shell because you started the same, but you can save half the time in the shell. That is, it's really important. It can, you can compress your construction schedule a lot.

And the cost, well, it depends on many factors because, for example, if you're going to build a small house, like a 2,000 square feet, maybe it's cheaper to make it with conventional block structure. But if you're going to do something bigger or more complex or repetitive, it will be, it will be definitely better with, with steel framing.

[Richard Bexon]

Yeah. It sounds like, again, is, I mean, look, from what I know is it's quicker to build, which means if you need to, like, if you're in a time limit and you're kind of riding up to that high season, you could take advantage of that high season instead of being in construction during that high season, which could be huge. I mean, you know, through those three, four months could generate, you know, 50, 60% of your revenue.

So it could be, you know.

[Andres Osbourne]

Yeah, actually we're building a couple of hotels that must be open for December, you know, and we're the only option to do, to do that.

[Richard Bexon]

Yeah. I mean, because conventional block takes, you know, I mean, a hotel can, you know, take upwards of like, you know, 14, 16 months sometimes, depending on how big it is. So, I mean, what parts of the process do you guys manage and what parts do you not manage?

[Andres Osbourne]

So we're, we're really involved in the design and construction phase, but we do like to be involved in the projects from the early stages to advise our clients on the best way to solve them. When a project is what we call framing friendly, we help our clients to make it efficient by making small adjustments in the design. We don't do the architectural design, you know, the client must have his, his, his, his own architect, but when the project is not a good fit for, for steel framing, we also advise our clients on the structural system that may be best for the project.

You know, we really want to add value to our clients. So if we're not the best option, we will be the first to, to let, to let them know. We don't want to, to lose time or, or make our clients lose time.

And our process, we begin with the, with the structural design. We, we include the foundations design and if you need like retaining walls or that sort of concrete elements, we also do that, that structural design, of course, those, the, the, the steel framing. Then we go, we continue with the beam modeling.

We model the structure in our software. Well, it's, it's not our software. It's we use frame machines.

So we use Framcat software, Framcat software. Framcat is one of the biggest and well-known cold form steel machine manufacturers in the world. And so we, we model every wall with exact length, height, stud spacing.

We model the floor joists, the roof process and basically everything. And from here is that we get the production file that goes to the, to the machine. And the next step is the manufacturing and penalization.

That's the part of the process that happens in our production facility. When we produce all the profiles to the exact length and we assemble them in panels and trusses, and then we transport them to the, to the site where we finish with a, with a structure installation. So that's, that's our typical scope.

And for, for big projects, like if you have 20, 30 houses and they're repetitive, we, we can also add something more towards, we're flexible with that.

[Richard Bexon]

So, I mean, basically is if someone's building a single family home, it's work with an architect and then from there kind of then chat with you guys, you know, about then when you have to go to, when you have to start building construction documents, I would say, you know, then you can bring you guys in to figure out what to do.

[Andres Osbourne]

With a schematic design, we can give a quote to the client so he can compare if we are the best option. And we start there, we talk with the architect, we do all the process with the client. So, so yeah, that's, that's how it begins.

[Richard Bexon]

I think the good thing is you're just going to tell a client if you think it's just not right. Like if it's not worth your time, it's not going to be really worth theirs. It's better to just say, look, it's better that you just stick to conventional, regular, you know, you know, block construction.

So I think that that's smart. Totally, totally. What mistakes do you think people make when building in Costa Rica?

Because I mean, we've seen them all, but I mean, what mistakes do you, what are the big ones?

[Andres Osbourne]

Yeah, this is a good one. And I think that real estate is local, right? So you need to know the, how things moving here or the particular processes to build here.

And Costa Rica is a small place, but foreigners often don't have the network to check the references. So I think that the biggest mistake people make when building in Costa Rica is choosing the wrong team or local partner or not having one at all, because you need that local part that will help you avoid making a lot of mistakes during the process. And also when you're choosing your GC or the subcontractors, then go for the cheapest one, saving money because someone is cheaper might be one of the costliest mistakes you can make.

Of course, when you're doing your numbers, you may be tempted to go for a cheaper option because on paper it looks great, but we'll know what can happen. Yeah. Yeah.

So in Costa Rica, like in everywhere else, there are very competent options, but also a lot of unprofessional companies that can give you a long and bad headache.

[Richard Bexon]

Yeah. I mean, I think it's, you know, it's your project is only as good as your team. You know, I agree the cheapest is not always the best just because, you know, I mean, we've picked up projects before where stuff's been underbid and they're like, look, we'll get the client into the project, get the make months through, you know, and then tell them that like, Hey, you need to put in another a hundred or $200,000.

I've seen that happen a lot. So, you know, I think it's really important to have someone and, and folks to compare against here, you know, and bring, because what we do is when we go out to bidding, I mean, we break it all down from gray works, roofing, electromechanical, everything. So we can see where these variations are.

And we've gone back to people before and being like, dude, you're underbidding this hugely because we know, but also as comparing to everyone else, like it's half the price of everyone else. Why is that? You know, and then there's usually a mistake or they forgot something.

And if you'd have gone ahead with them, they would have been like, Hey, we made a mistake. You need to pay for it. Like, you know, cause then a lot of the time they're not going to take responsibility for it.

So totally. Yeah. Yeah.

Yeah. I mean, what do you think are the best up and coming areas to invest in Costa Rica, Andreas? Yeah.

[Andres Osbourne]

I would say that Guanacaste is still the best area to, to, to invest in Costa Rica. There are some hotspots in the recent years, like Tamarindo and Nosara that are still growing, but I think that there are huge opportunities to in nearby and less known towns. Also, I've been hearing a lot of, Dominical in the Southern part of Costa Rica.

And you can still buy land at a reasonable price there. And I think it's growing a lot. In fact, we're currently installing a three story building here and we had a couple more in the past two years.

So I think this is, this is a, a good area too. And, well, I was telling you that last month I went to La Fortuna with my family and I was impressed. I saw a lot of tourists in all the restaurants.

Everything was full, waterfalls and hikes had the parking lot full. And it's, it's a very nice place with a lake, with a volcano, there's a lot of land. So I think there's, there's, there's a lot of opportunity.

Of course, I'm not a, I'm not an expert in this, in this topic, but that's what I can, I can say, you know.

[Richard Bexon]

Yeah. No, I mean, we have two projects up in Aranau at the moment where, I mean, the reason the clients are doing it is because we directed them there. Like we just looked at the numbers and it was like, look, that's where to, there's a huge opportunity in that area.

Land is a little bit less expensive, but the occupancy and average daily rates are great. And there's just nothing, there's not anything from a vacation rental point of view that's luxury, you know, it's all luxury hotels and those hotels are getting just as much money as the beaches. Like, you know, it's, it's incredible.

So yeah. Well, my last question for you, if you inherited $500,000 and had to invest into a business or real estate in Costa Rica, where would you invest it? And what would you invest it in?

[Andres Osbourne]

Well, yeah, I wish. Well, I have a real estate investment now. This is personal aside from, from Biltec.

I bought a lot in, in, in Guanacaste and I will, I will build four houses with Biltec of course. I think with half a million, I would do another project like this one. It's for the U.S. market. It's high-end houses. It's inflated nearby, near the, near the beach. So I think that's what I would do.

But also I think that buying a piece of land in Papagayo, Nosara or Santa Teresa, not in a prime location, but located well enough to build some houses for start living. There are a lot of Costa Ricans that work in these places and must travel long distances because there are no places affordable for them. So I think that that is also a very good idea.

[Richard Bexon]

Yeah. I mean, I agree. Look, I know a lot of people that live out of the beaches, Santa Teresa and Nosara, and it's so difficult to find anything good.

So I think it's an, it's something that not a lot of people are looking at because they're either looking at surfing, you know, vacation rental high-end markets and no one's thinking about who's going to service all these. So, so yeah, I think, I think that's a great idea. Well, Andreas, it's been a pleasure to do the podcast again with you.

I appreciate you having patience there on recording it. For anyone that wants to contact Andreas or know a little bit more about BuildTech, all the contact details are in the description, but very much appreciate your time, sir. Yeah.

Thank you, Richard. And thank you for my first two podcasts.