El Dorado Master Plan
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Condominium
Hacienda El Dorado will be registered with the Costa Rican government as Condominio Hacienda El Dorado. As such, it will be a condominium according to Costa Rican laws. The full text of the law is available both in English and Spanish. All purchase/sale documents and governing condominium documents specific to Hacienda El Dorado will be in both Spanish and English.
Closing Costs
The Developer will create a corporate entity for the purchase of each house and the purchaser will buy the corporation. This is the most common form real estate ownership in Costa Rica. In addition to anonymity and asset protection, corporate ownership allows more flexibility in estate and tax planning. The purchaser will buy the shares of the corporation which owns the property. Buying in a corporation also reduces closing costs, land transfer taxes, and if structured properly, it may reduce or eliminate probate fees. It is also possible that capital gains and income generated from the ownership will be taxed at a lower rate than otherwise. By granting special powers of attorney, property can be managed more easily from a distance.
The purchase price includes an LTD. company. This is a legal structure in Costa Rica designed to hold assets not used in active business. The administration of them is less cumbersome than S.A. corporations (e.g. only one board director vs. three, no requirement to publish shareholder meetings, etc.). The purchaser's share of the closing costs will be .75% of the purchase price.
Common Element Fees
The common element fee will be divided into several categories: Property Management, Operating Costs and Corporate Social Responsibility Program.
Property Management: This will be fixed probably for the term of the property management contract. At Los Jardines, this fee is $100.
Operating Costs:This figure, while not yet determined, will be based upon the level of service desired by the owners but is expected to be in the range of $150 to $175 per house on average. To determine a more precise amount of the Operating Costs component of the Common Element Fee, simply calculate .08-.09 cents per sq. ft. or $0.80-0.90 M2.
Corporate Social Responsibility Program: All home owners will pay a fixed monthly fee expected to be $10 which will be used for projects in the immediate community.
The comparison shopper will realize that the total common element fee is higher than in some other developments. Why?
- El Dorado has about 60% garden, parkland and social areas which need to be maintained.
- Security in the form of gate, foot patrol, and night lighting need to be maintained by a relatively small number of people.
- Infrastructure is more complex —our own reliable water, back up electrical generation, and black water treatment facilities— all have to be maintained.
- All common element buildings and social amenities have to be maintained and consist of way more than is normally provided in other developments.
- Exterior building maintenance of homes is included and all common element and non enclosed garden areas are maintained.
- Garbage and refuse collection.
- On-site property management and administration for maintenance coordination and supervision, bill payment, equipment maintenance, government compliance, etc.
The Reserve Fund
Unlike most Costa Rican condominiums where no monthly provision is made for a reserve fund and expenses out of the ordinary or any deferred maintenance has to be covered off by a special levy, Hacienda El Dorado will form a reserve found. On closing, each household will contribute $600 towards a reserve fund which will be held in trust and used for replacement and maintenance of common element facilities and equipment.
Lease Management and Administration
As in the case of Los Jardines, the property management company will provide a “leave-and-lease” service. Tenants will be found for owners wishing to lease their units, either full time or part time. A complete record or accounting will be provided to the owner on a monthly basis. The owner can be comfortable in the knowledge that his property, while earning income is also being looked after. A fee of $100 per month is charged at Los Jardines for this service. Revenue is kept in trust and distributed quarterly to the owners according to their instructions. At Residencias los Jardines, the rental demand has been very strong. Frequently there is a waiting list of would be renters. Occupancy has been around 85%. All units are leased furnished for about $1 per sq ft/month.
Financing
No specific financial partnerships have yet been formed. The Developers are actively working with several major financial institutions to provide pre-approved mortgages. The banking scene is changing daily in Costa Rica —private banks are merging with international banks and all are becoming more aggressive in their offerings— terms and rates are becoming more reasonable for non-residents, more banks are beginning to recognize the value of the non-resident market, and residents including Costa Rican’s are benefiting from this new competition.
The Developers expect to form advantageous financing arrangements with one or more banks before the permits are issued and the first progress payment is required.
› See Typical Terms and Conditions of Banks Providing Mortgages to Non-Residents.
Prices
Over the past several years, the cost of construction has risen substantially. Land, materials and labor are all 25% to 35% more expensive today than early to mid 2006. We cannot begin to replicate our building costs at Los Jardines. We expect this cost increase to continue for the next few years. Our price reflects our construction cost estimate for the delivery of these houses two years from now.
Comparative shoppers will see that our homes are neither the least expensive in the Central Valley nor the most expensive. We do not strive to be the least expensive but we do strive to offer the best value. Other developers offer attractive homes with good quality construction. It is the little things which oftentimes make the difference —the quality of finishes, the presence or absence of moldings, quality of doors and hardware, the placement of electrical and cable outlets, the grounding of electrical circuits, the amount of cabinetry and the design of the kitchen, enough lighting where you need it, appropriately sized rooms for the size of the house, furniture, and lifestyle, enough windows, inclusion of an office space, storage cupboards/closets, closet organizers, emergency lighting, built in safe for valuables, front door located such that you and your guests do not have to squeeze between two undersized parking spaces to get to, overhangs to protect the building and to prevent sun and rain from interfering with the covered terrace, a terrace that is actually useable, hot water plumbed to all faucet locations, the use of “P” traps, vanity drawers for storage, built in medicine cabinets, the inclusion of large bathroom mirrors etc.
In addition to the quality craftsmanship, Hacienda El Dorado offers a number of other luxury amenities, such as extensive parkland available for use and enjoyment, swimming pools and outdoor jacuzzi tubs, BBQs, water fountains, exercise equipment and other social and recreational community furnishings. We also count with own emergency electrical back up for security and water reliability, a black water treatment facilities for irrigation, a fully staffed on-site property management and rentals office, etc.
Cost of Living
While each household and lifestyle will influence cost of living, the following are reasonable estimates:
Electricity |
$40-$60 |
Cable TV & High Speed Internet |
$65 |
Telephone |
$5 |
Common Element Fee |
$275 |
Property Taxes ($250,000 House) * |
$52 |
Property & Liability Insurance ** |
|
Maid (3 hours/Twice a week) |
$25 |
* Property taxes are very low in Costa Rica. Currently property taxes are .25% of the “declared value” of your home. The practice is for most people to understate the value of their property. This practice may be changed in the future. Regardless, the value declared cannot be less than a registered mortgage. Assuming a declared value of $250,000, annual property taxes would be $625.
** Most people do not feel it cost effective to have property or liability insurance. Unlike in many parts of the world, Costa Rica has not yet become a litigious country. Individuals are responsible for their own welfare. Homes are built from non-combustible materials. Most people do not carry theft insurance because it is relatively expensive and difficult to qualify for collection. Earthquake insurance is available but it is not certain that the state insurance monopoly (INS) would pay out in a timely manner should there occur a major disaster.
Financial Viability of the Developer
At Hacienda El Dorado, the same Developers, Paul and Brian, own the land outright through Sunset Valley Property Group (SVP) S.A. (ID# 301-434-180). It is expected that this company will be transformed into Condominio Hacienda El Dorado. The Developers have the personal resources to complete the infrastructure. Once permits are in place, purchaser progress payments will facilitate the build-out of the development. If at any time, a cash flow from progress payments is inadequate to cover the immediate building costs, we can draw on additional personal resources and construction financing is readily available.
Purchaser Progress Payments
While the final progress payment may be influenced by the financial institution(s) selected to provide mortgaging, the following is a typical schedule.
Reservation Deposit: $10,000
Due: Contract Signature
Refundable 15 days following signing. If the purchaser uses a real estate agent, $5,000 will be paid to the agent on the 16th day following the release of funds. This portion of the reservation deposit will become non-refundable. (Purchasers may make other arrangements with their agent.) The remaining $5,000 will be held in trust pending approval of the condominium development. When the Developer is granted site plan approval, the $5,000 deposit remaining from the reservation deposit will become non-refundable. Should the Developers fail to obtain site plan approval as substantially advertised; the $5,000 will be refunded.
Purchasers in Costa Rica can make their reservation deposit by writing a check to Sunset Valley Property Group S.A. or make a direct deposit to our account in Scotiabank. Purchasers outside Costa Rica can make their reservation deposit by wire transfer (See instructions below.)
Transfer the sum of USD _______ to The Bank of New York, New York SWIFT IRVTUS3N / ABA No. 021000018 for credit to Scotiabank de Costa Rica S.A. account No. 8033383577 and final credit to the account No. 17100645 of Sunset Valley Property Group. Please instruct The Bank of New York to send a SWIFT message MT103 to Scotiabank de Costa Rica S.A. SWIFT NOSCCRSJ
Scotiabank de Costa Rica:
Forum Santa Ana
Frente al Centro Comerical Santa Ana 2000, carretera a Ciudad Colón.
Tel +506 204-7800
| Payment | Progress | Due |
|---|---|---|
| #1 | Deposit topped up to 20% of base price * | When the development is approved, the purchaser will have 15 days to bring the deposit to 20% of the base price. This amount includes the $10,000 deposit. |
| #2 | Deposit topped up to 40% of base price * | When construction permit is issued for the house purchased. |
| #3 | Deposit topped up to 60% of base price * | When the sub-roof is on. |
| #4 | Deposit is topped up to 75% of base price * | When all gray work, drywall work, all rough in electrical and plumbing work is finished and the building is water tight. Ninety percent (90%) of the full cost of optional upgrades is required at this time as well. |
| #5 | Deposit is topped up to 95% of base price * | Upon substantial completion of home construction. |
| Final | Deposit is topped up to 100% of base price and the remaining 5% of the optional upgrades * | When all deficiencies have been corrected which usually will not exceed 15 days following substantial completion. |
* Base price is the amount agreed to minus optional upgrades.
CALENDAR OF PROGRESS PAYMENTS
| Phase I (West) | |
|---|---|
| November 2008 | 20% |
| December 2008 | 20% |
| January 2009 | 20% |
| February 2009 | 15% |
| March 2009 | 20% |
| April 2009 | 5% |
| PHASE II (East) | |
| November 2008 | 20% |
| October 2009 | 20% |
| November 2009 | 20% |
| December 2009 | 15% |
| January 2010 | 20% |
| February 2010 | 5% |
Note: The aforementioned dates are approximate and are subject to change.
Planned Price Increases
As is normally the custom, the Developer anticipates making periodic price increases during the sales period. This is normally done when certain levels of sales are achieved i.e. at 25% sold, at 50% sold. Purchasers who bought early at Residencias Los Jardines realized a substantial capital gain. While the Developer is not promising the same for early purchasers of El Dorado, below are some of the actual sale and re-sale figures realized at Los Jardines:
House |
Original Purchase Price |
Re-Sale Price |
Capital Appreciation |
Capital
Appreciation |
Time Lapse |
|---|---|---|---|---|---|
103 |
$90,000 |
$120,000 |
$30,000 |
33.3% |
14 months |
106A |
$65,000 |
$145,000 |
$80,000 |
123.1% |
8 months |
106B |
$75,000 |
$140,000 |
$65,000 |
86.7% |
18 months |
108 |
$178,500 |
$250,000 |
$71,500 |
40.1% |
8 months |
111 |
$165,000 |
$184,000 |
$19,000 |
11.5% |
10 months |
118 |
$137,500 |
$165,000 |
$27,500 |
20.0% |
14 months |
In addition to capital appreciation, rental units ROI is approximately 6% to 9%.
Builders Warranty
The Developer provides warranty as stipulated by Costa Rican law. 5 years for structural and electro-mechanical systems and 1 year for defective workmanship. The manufacturer’s warranty will be passed on to the home buyer for all appliances.
Schedule for Completion / Delivery of Finished Houses
While the Developer has little control over the government's approval system, we have been advised to allow 8-12 months for site plan approval. Assuming 8 months for approvals from November 2007, construction of the infrastructure would begin around June 2008 and the delivery of the first completed houses would be approximately April 2009.
Phased Construction
Construction is anticipated to be done in phases beginning with the west side. Once each phase is completed, no more construction will be done in that phase. The Developer should be able to complete all construction beginning from the time the first unit is delivered in each phase to not more than four additional months before final completion of that phase.
The site has two entrances and once the west side is finished, all construction vehicles will use the east service entrance.
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E-mail: info@eldoradocostarica.com : Tel: 011 506 8393-4666