Welcome! This page isn’t on the menu, so you’re here by special invitation. And it is special! But few will ever really understand how special a deal this is.
Casa de Luz is held in syndication, which means accredited investors can own a share of the high income and upside from one of Costa Rica’s most exquisite beach resort properties.
Unlike any “vacation ownership opportunity” you’ve ever seen, the investors make good money here before the operator does, while you eliminate all the headaches of operating your own rental property.
With values so inflated today for quality US real estate assets, diversifying a bit of your portfolio to paradise might be as refreshing for your returns as a visit to paradise would be for your mind and body…
The deal is pretty simple, and a 2-page summary is available here:
- Deep Discount
Casa de Luz is a VIP-class beach estate property built in 2003, and acquired in February 2015 for 2/3 of its replacement value and market comps – which means a 50% incoming value bump on your investment, and big downside protection.
- High Profit Business
The asset supports a business focused on ensuring superlative guest experiences in every respect, and our consistent 5-star online reviews prove we succeed. Luz is fully performing and more: most of our 2016 budget is booked with deposits, leaving nearly half of our nights still open to book, while our breakeven is under 20% – these figures are nearly unheard of for a rental property. We should exceed our 2016 plan (10% cap rate) with very low downside risk.
- Bulls Eye Investment Asset
At every scale from national to neighborhood, this project is a “bulls eye” of superlatives. Costa Rica is one of the world’s top destinations for tourism, retirement, and investment safety – in 2015, Priceline named it the #5 most desirable international destination ahead of Paris. Low taxes, no currency controls, supportive government environment, high economic freedom ratings, continuous democracy since 1949, no national army or internal/external strife, highest literacy rate in the world, 90% of national energy from renewables, and a higher-rated health care system than the US. Our town of Tamarindo is the hottest beach town on Costa Rica’s “Gold Coast” – and was named one of Trip Advisor’s top 10 destinations in Central America for 2015. We’re on the best block in town called “Millionaire Row”, with the most beds of any beach estate on the block, and we have the only mansion where every room in the house views sunset on the sea.
- Growing Demand But Fixed Supply
Local tourism is growing double digits annually, fueled by an expanding international airport one hour away with a newly paved highway to town. Local development is active, but it is literally impossible to construct any competitive beachfront mansions within 1/2 hour of town for geographic and statutory reasons. Rents, occupancy, income, and value should rise rapidly – we expect this year’s 10% cap rate to be 11% next year, and so on.
- Value-Add Opportunities
We installed a custom bunk room, taking bed count from 15 to 23. This enabled 20%+ rate increases while offering unbeatable value: 6 couples with kids can now enjoy their own fully-staffed beachfront resort for the price of 3-4 regular hotel rooms in the area. We also improved dozens of other details for maximizing guest satisfaction from wifi access points to decorating improvements, built out this web site, and SEO work is initiating to further increase prospect traffic. Solar is now being explored to reduce our largest expense line.
- High-Upside Investment Opportunity
Investors receive a 7% minimum preferred yield, paid quarterly, against an 80/20 split of the operating income and exit upside. So, investors receive at least 7% yield every quarter before the operator starts sharing in the profits at all. And, investors get 80% of the total profits no matter how good they are. We think they will be very good! And we don’t know of another syndication by any operator that is biased this far in favor of investors. Perhaps that’s because in this syndication, the operator is the largest investor!
- Extreme Financial Safety
Our goal is to profit from “a castle with a moat” – physically, competitively, and financially. Following pay down of remaining seller financing with investor funds, we will hold the asset without a mortgage for safety and stable yields. Avoiding leverage means that most of the ways a real estate project can sour will simply not exist here. The asset is located far from storm tracks, tsunami zones, and other natural risks except earthquakes, and is insured against all such risks – and it is built from reinforced concrete so it can ride out an 8.0 quake and even resist salty sea air. We expect to exit in 3-5 years at twice the purchase price (details in offering materials).
- Operator Commitment
The operator is highly experienced, and has already invested more personal funds than any of the investors will, at the same terms. Unlike all other syndications we know of, the operator is not taking any acquisition or exit fee – the operator gets a small share of the profits earned for you, but not a dime out of your pocket.
It is exceedingly rare to find a real estate syndication deal with such low risk, such high yield and so much appreciation upside. And, investors receive various visitation benefits – so writing off a trip to check on your asset can be one of the best vacations of your life. But unlike other vacation rental investments, you will earn enough yield to pay for a nice annual vacation anywhere you want in the world, without ever being stuck choosing from some provider’s list or maintaining your own place every time you visit. And that makes Casa de Luz paradise for our investors, not just our guests.
For additional information including full investment package, please contact Arthur Zwern at 408-482-1708 or Arthur@NextLevelAssets.com.