Ever wonder about what it would be like to own a vacation rental home in Costa Rica that you might one day retire to? This week’s article is an interview with Christine Schiferl, one of the founders of Jaguar Property Management. I asked her a few questions over lunch about what makes a great property rental in South Pacific Costa Rica and what buyers can expect from their property.
Christine has lived in over twenty countries but says that Costa Rica is where she feels most at home. She and her husband Tom came to the Costa Ballena in 2008 and bought their property on their first trip. They built their home in 2011 and traveled back and forth between the States and Costa Rica until they moved here permanently in 2013. They started their business that same year with Ann-Marie McWillis and have grown into a successful local company with a stable of over two dozen homes. After so many years in property management in Costa Rica, Christine has come to understand exactly what guests want.
What makes a good rental home in the Costa Ballena?
A three-two or three-three is almost the minimum of what is expected of vacation rentals in Costa Rica. I would really like to have in our stable to homes a four bedroom and a five bedroom home because there are often families who come for reunions and weddings and they need larger facilities because they want to be together. That’s something you don’t see enough of here.
I think that people want rental homes over traditional hotels because they want privacy but still want to be close to amenities. A/C is essential in the bedrooms.
People also prefer ensuite bedrooms and for all rooms to be similar size so that no couple feels left out in the small room with the twin beds.
Most people want to have an ocean view and to hear the waves. And because people are often coming from cold climates, they are not used to the heat and need a pool. A good outdoor space is crucial, with some shaded places for lounging and barbecuing.
Privacy, wildlife, birds, and hearing howler monkeys is also essential to the experience. Older homes have great opportunities for rentals due to the mature landscaping, with flowers and gardens that bring a lot of wildlife to the property. I think that privacy is king when you come to our region of Costa Rica. People who are spending $250+ per night want their own place in the jungle.
Even still, the majority of guest want internet and to talk on the phone. Some people need to work, even when on vacation. Having a tv is also essential. If it’s raining at night and the kids are restless, people will want to watch movies.
How do you decide on pricing for a rental home in Costa Rica?
It’s a good idea to start lower than you’d ideally like to begin with and then bump the price up after you get a few good reviews. It’s all about reviews. You have to entice people to come there and reviews do that. People say things like “wow, I can’t believe I got this place. It was fabulous,” and then you increase the price from there. We know when we’ve hit the right balance between price and bookings because we track and compare everything.
What kind of return on investment can be expected from a rental home in the Costa Ballena?
Our recent clients are finding good rental income because we are choosing the type of properties that we know are going to be popular with vacationers. If it’s an older property, it’s likely going to need a lot of repairs and improvements, cutting into returns. The nightly rate is also not going to be as high as a it could be with a contemporary, luxury, three-master ensuite bedroom with an ocean view and all the amenities that a home needs to really be successful.
Most of our homes rent for US$250-300 per night. I try to keep our prices under the $300 mark because when people are using search functions, they’ll use price cut offs. So if you stay under that $300, you’re going to get more exposure. Super luxurious homes warrant much higher nightly rates, of course.
As of July 1st of this year, a new service tax will be added to services like landscaping, cleaning and property management, which directly affects our clients. However, this tax gets passed on to the end consumer because we will increase the nightly rates.
What kind taxes do your clients pay on their rental property?
All of our clients pay income tax, which is typically 10%. This incurs monthly accounting fees for filing a D101 every month. We have a corporate accountant who does that for our clients through our business.
How often are your rental properties occupied?
For some of our homes, we are already booking into April of 2020. In general, our homes are rented about 50% of the time over the course of the year. During the high season, from December to April, most homes are rented about 3-4 weeks per month. There are often some days in between guests, which accounts for not being booked all season.
May is a quieter month that is sort of a lull after the high season. We tend to get last minute bookings for June, July, August because it tends to be people from the United States whose children are on vacation who look at themselves and think “oh, we need to go on a vacation.” We still have people booking last minute for this summer. Those months tend to be rented 2-3 weeks every month.
And then, of course, you get into the rainy season — September, October, November. Those months tend to slow down to maybe 1-2 weeks rented per month. Although we are seeing more and more people that are building here, buying here, moving here, and they want to experience Costa Rica in the rainy season. Or they are here because they are building and they want to see what it will be like living here long term. And it’s less expensive in the rainy season. Usually people get a better deal if they rent for 2-3 months in the rainy season.
How often are your guests here to look at properties for sale in Costa Rica?
I’ve had guests ask “is this house for sale? I want to buy it.” People who come here and stay here are a lot of them thinking about coming back and looking at the potential for investing. We originally came here on vacation. But I always told my husband, Thomas, that I want to go on vacation with the idea of looking to see if it’s an area that we potentially want to invest in, retire to, move to, and we ended up coming here with a line up of properties to look at. We found our property on day 2 and closed a month later on our first trip here.
One of my friends said “don’t buy on your first trip” and I, of course, said that I would never do that. I’m a totally cautious financial person. I went home and told them that I bought a property and it was double my budget. And that I have no regrets! I love our development. I love our property. I love our home. Every morning I wake up with an attitude of gratitude, thinking my god, we’re so lucky. We have each other. We have our home. We get to live here in the jungle with all of the wildlife. Every day is an adventure.
What do you do for people looking for a long term rental in Costa Rica?
About two years ago, we started a new website called Long Term Rentals Costa Rica because we started to see a growing demand from renters who want to stay here long term for 3 or more months. Maybe they want to immerse their children in the culture over summer vacation, they want to try out living here, or they are waiting for their home to be completed. We started Long Term Rentals to include homes that may not check every single box, that maybe don’t have an ocean view or all of the amenities that are more geared towards vacationers. There is a big market for those types of homes to be rented for a longer period.
How do you market rental properties in the Costa Ballena?
We used to only use VRBO back when I was afraid of using two platforms and double booking or making an error. About two years ago, I started using AirBnb as a way of expanding our customer base. And it’s great because the calendars do talk to each other.
Airbnb tends to be more favorable to the guest, as far as their policies are concerned. Cancellation policies and return of moneys paid for reservations are better for customers on AirBnb. VRBO favors the homeowner. We use both to maximize our exposure.
I normally begin the season with a 5 night minimum. Once I feel like we are nearing a good capacity, I bump that down to three nights occupancy as a minimum and fill in all of those gaps. The process is fairly nuanced.
I’m always thinking ‘what else can we do this year?’ Little things like going back to all of our past guests and offering a discount. 10% during high season, 20% during the summer, 30% during rainy season for a return guest. We have a lot of return guests — people who have stayed with us for 4-5 years in a row.
I have tried TripAdvisor but they don’t give you the guest information until a week or two before the guest’s arrival, which I find horrific. I can’t communicate with a guest and give them all of the information ahead of time about booking cars and tours. Those things often need to be done months in advance if you are going to get the car you need and go on the tours that you want.
What makes owning a rental home in Costa Rica different to anywhere else?
We have learned so much about how things work here in this foreign country, like what you can do and what you shouldn’t do. Many come here maybe having never been before, so we walk them through legal issues, financial issues, tax issues – owning a rental home in Costa Rica is not just buying a house and renting it out. There’s a lot to learn.
People who have had experience being a VRBO owner of another property in another country may understand how that process works, with guest inquiries, bookings, reservations, managing the guests before and after the stay. But it’s also different. For one, the climate here is very different. You may have an oceanfront property in another place in the world but there, appliances don’t rust. Things break down here more quickly. You may one day find ants in your tv, or that a wasp that wants to build a nest in your radio. We may have cleared a piece of property but we are still just guests here in the middle of the jungle. We are the outsiders. All of the animals and insects are our hosts.
The tax structure in Costa Rica is also different. Getting things done in general is a complicated process. Arranging someone to come out and take care of things can be a complicated process if you don’t have a good set of reliable contacts. We are fortunate that we have had so many relationships built with so many contractors over the years and we represent a large chunk of their income. If we say that we have a problem and “we need you here in the next 2 hours,” they drop what they are doing and come help us out. Having good relationships is important to getting things done.
Do you think property investors need a to hire a property management company in Costa Rica?
It would be a challenge to independently have a rental property. I think if you lived here and you know the ins and outs, it would be doable. But just to keep up with the tax regulations and the law and tax reform, it’s hard as an individual to have the resources to know all of these new things that come into effect. We are responsible for our clients and responsible for keeping them compliant.
Which guest concierge services do you offer as a property management company?
We try to refer our clients to the trusted relationships that we have built over time. We refer our guests to Solid rental car in Uvita. And because we represent such a large income to their business, they bend over backwards for our clients. If we have a problem with one of our cars, we get a new car the same day.
Our preferred tour concierge service is Karol at Pacific Expeditions. We introduce our guests to her and she organizes everything for them. She has established relationships with all of the tour guides in the area and offers our guests a corporate discount.
What fees do your clients pay for your services?
At Jaguar Property Management, we offer la carte services. Property management starts at about $200 per month. That covers the bill payment, the work that we do for receipts, purchasing items for the house, guest supplies, purchasing repair items, taking care of repairs, doing the inspections. Twice a month, we check all of the electrical, all of the plumbing, run the a/c units, flush all the toilets, check that the microwave is working and the stove — every appliance in the home. Inspections, repairs, and bill payments is basically what property management is.
On the rental income side, we get paid 20% of the gross nightly rate. This covers putting the house on our website, putting the house on VRBO and AirBnb, getting accounts set up to take in your rental income, whether it be here, in the United States, or elsewhere. We handle every inquiry, every booking, all of the questions prior to their arrival, and during their stay we take care of them. We check them in person and from 6am to 8pm we are available for the guest.
Housekeeping is something that I like to keep in-house rather than using contractors. Our team have been with us for a lot of years. The cleanliness of the house is a direct reflection on Jaguar Property Management. The house cannot just be sort of clean — it has to be impeccably clean. I’m talking about having the towels folded just right. I’m talking about flower arrangements around the home. Our people are hotel trained. They do a great job and are super reliable. They are more expensive but they are worth it. They are honest and have returned things like $4000 cameras, gold necklaces, and Prada sunglasses. Having the ability to hand them a spreadsheet every Monday and to know that they will get it done is priceless. For this type of detailed service, we charge $65 for a 2 bedroom home and $80 for three bedrooms. The guest pays that cost at the end of the line. Even in the off-season, I still recommend that a house be cleaned at least twice a month because of bugs and mold.
What are the most popular areas in the Costa Ballena for vacation rentals?
We are really spread out quite equally amongst Dominical, Uvita and Ojochal, with an equal amount of homes in each area. Ojochal is popular with foodies given the large assortment of fabulous international restaurants. Dominical is a sleepy surfer town with lots of modern homes in the mountains nearby. Uvita popular for rental homes because it is central to the other two communities. It is the livable town, where you have everything you need: grocery stores, banks, and stores for clothing, appliances and furnishings. I see a lot of opportunity in Uvita; a lot of expansion happening. It is centrally convenient for tours and things to do. Having a home that’s convenient to town is great for everyone.
Do you have advice to give people who want to own a rental property in Costa Rica?
If we know someone who is buying a property in Costa Rica, a lot of times they want us to come look at it. Or they might have a couple of properties that they are looking at and they’ll ask which one we think will be a better rental income producing property. And then sometimes people have already purchased property and now they are interested in renting. I have become really good at knowing what makes a good rental property and I’m happy to share that information with people.
What do you enjoy about living in the Costa Ballena?
We try to get out to the beach every Sunday. Of course, Sundays have no meaning in our business. We are just as likely to have a weekend checkout as a weekday checkout. But we love the vibe at Playa Ventanas on the weekends. Tom likes to take his boogie board out. I like to walk down the beach and hunt for driftwood, which I use to make candle holders out of for my friends.
I love the culture here. Somebody asked me one time why I chose Costa Rica. It was divine provenance. It was just meant to be. I had done research and Tom wanted to be in the mountains and I wanted the ocean. This is a place where we have both. We both love wildlife, animals, and seclusion and privacy. This checked off all the boxes as far as a country.
I think for me it has some of the topography of Okinawa with the cliffs and it’s more mountainous and you’re near the ocean and then the culture of Thailand. Thai people are very happy people. More simple, more laid back, and I think Costa Rica is like that, too.