Land Banking

What is land banking? - Land banking is the acquisition of land in advance of expanding urbanization. The price of an open space parcel not yet subject to urban development pressures will probably be more closely based on current rather than speculative land uses.

What are the benefits and upsides of land banking?

• Land has the potential to experience tremendous appreciation if bought in the way of growth, or if a higher and better use can be achieved.


• Owner financing can often be obtained through the seller at below-market rates.


• Subdividing can create added value and provide for immediate returns.


• Bricks and mortar depreciate, well selected land increases in value.


• Land is in limited supply “they just aint making any more of it”
  

What are the potential downsides?

• Negative cash flow; usually the land does not generate any income while you pay the principle, interest, taxes and costs of development.


• Tax advantages are scanty as land cannot be depreciated.


• Generally, raw land is considered a long-term ill-liquid investment that often takes time before gains can be realized.


• Risk of loss on resale can occur if you choose poorly, fail to evaluate and negotiate properly, the economy slips or various other unforeseen events occur.


• It is difficult to obtain traditional financing on or borrow against accrued equity.
  

When buying land for land banking what should you look out for?

• The worst you can buy is swamp or marshland.


• Most often flat land is the least expensive to develop and the most desired for building purposes.


• Land with barren rock will increase costs and virtually eliminate a basement just the same as a high water table.


• Plots with trees, a view, rectangular in shape, a gentle slope or none and a good location are most preferred.


• Streams can boost values by 100% in some cases.


• Many people are literally being driven to the hills. Granted the views can be spectacular but roads, utilities, water, sewer, and foundations, such as pilings, can add to building costs
  

How does Finca Di Pacifico Dos stand out?

• Teak growing on your plot offsets the negative cash flow – providing a positive cashflow at harvest, prior to onward sale or development of your plot.


• All plots come with permission to build one residence


• Services - water and electricity are on site.


• Many have river views and sea views


• Tourist development is quickly encroaching on Finca Di Pacifico Dos with a new marina under development, the opening of a new port and docking facility in Puntarenas and many new hotels in Puntarenas and surrounding areas.


• As the baby boomer generation begins to retire your teak will have matured and be ready for harvest as demand for land continues to rise.


• There are multiple exit strategies
  

Finca Di Pacifico Dos may be “the perfect investment”, the teak providing a secure return whilst the land has the potential for spectacular increases in value.

So you can invest right now and have a rich future!

What's great about our investment?

What's great about our investment?

Trees don't know about credit crunches and banking crises!

They continue to grow regardless.

Better still you they are a real investment: you can see your trees, touch your trees, hold on to your trees.

They don't dissapear into the night like stock prices, securities and bonds!

Demand for Teak continues to rise, supply continues to fall - leading to continuing price rises

Combine your teak trees with development land in Costa Rica and you have what we modestly believe to be the "perfect investment"

Remember you own the land, you own the trees, you are in control

Have a look at our website http://www.costaricainvest.ie/, send us an e mail or give us a call +353 1 272 4184 and speak with one of our consultants and see how we can make your investment dreams come true.

What is the recipe for our investment?

As many people are now discovering an investment in stocks, bonds, securities (and pensions) is not as secure as they may have thought.

The ingredients of our investment recipe are:

1. Take an investment in timber (the basic ingredients).

2. Combine that investment with a spoonfull of development land (the yeast to make the investment rise)

3. Add in Costa Rica (the icing on your investment cake)

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And what have you got

The recipe for the "perfect investment"

Why is now a great time to invest?

The Bank of England has cut interest rates to 2%, their lowest since 1951.

The inflation-adverse European Central Bank cut its benchmark interest rate by 75 basis points, the largest cut in the monetary authority's 10-year history. That means the key lending cost in the 15 countries for which the ECB is the central bank now stands at 2.5 per cent.

The Swedish Riksbank also cut its key interest rate — by even more that the others — a record 1.75 percentage points to two per cent. This reduction is the bank's biggest cut since June 1994.

The Federal Reserve cut their rates to 1% at the end of Ocotber 2008.

Intrest rates are running at historical lows. If you have savings you are earning less in interest on your savings now than ever before.

The cost of borrowings has dropped.

Now is a great time to invest.

Teak prices are rising at 8.5%per year over the past 10 years. Land in Puntrenas rose by 31% in 2007. Will this combination outperform the rates you are getting on your deposits?

Contact us and we would be delighted to show you how an investment in teak and land in Costa Rica, the hottest real estate market on the face of the planet" (CNBC Europe) - see the clip here.

"We simply attempt to be fearful when others are greedy and to be greedy only when others are fearful"Warren Buffett

We can be contacted by phone on +353 1 272 4184, by e mail on info@costaricainvest.ie or apply for a FREE brochure here

Newsletter October 2008

Newsletter November 2008 Finca di Pacifico-2

The “Association of purchasers of plots of Pacifico Dos”, an association for purchasers participating in the Pacifico Dos project, was established in August of last year. The objectives of the association include representation of the interests of the members in connection with the acquisition by members of the relevant plots of land. We welcome this initiative and we are confident that it will benefit communications between ourselves and the plot owners. The management board of the association will also provide regular reports on the progress of the Pacifico Dos project.

Intermediate Harvest

The intermediate harvest was completed in full last month. The timbers involved included teak and melina. During the intermediate harvest the poorest and most bent trees are removed so that even better growth can be expected among the sound trees which remain. Since only the most bent and poorest quality trees are harvested at this stage it is to be expected that the yield per m3 is relatively low. The total return is $ 86,684.48, with costs of cutting, loading etc already deducted, which is more than we had initially calculated. The best, that is to say the straightest trees have been left in place, at around 300 - 400 per hectare.

Before the intermediate harvest could be completed it was necessary to carry out certain maintenance tasks. A number of temporary roads are laid to provide access to the area for the selection and cutting teams and their equipment. This task involved around 45 forestry workers. With the cost of hiring a bulldozer, wages, chainsaws and fuel and the expense of selecting the trees for cutting, this operation cost around $84,120. We will provide the VKK with a detailed breakdown of costs for this operation. Rio Grande Verde y Azul s.a. will bear an element of these costs themselves, namely $ 34,000.As reported above, the return on the intermediate harvest is $86,684.48. An element of this return will go to Rio Grande (in relation to the as yet unsold plots), and the remaining $ 26,911.46 will be transferred to the association in Costa Rica. The association will decide how these funds are to be allocated.

73.6% of the project has been sold, so that 73.6% of the return is destined for the association.26.4% of the project is as yet unsold, so that 26.4% of the return goes to Rio Grande.
The next intermediate harvest will take place in around 3 years, and will deliver appreciably higher profit per m3. In order to avoid any conflict of interest the next intermediate harvest must be organised by the association. It is amazing how quickly the remaining trees respond by expanding their crowns to fill the newly created space. This leads in turn to a rapid increase in the girth of the trunks.

Licences

A meeting was held recently with the team engaged in the implementation of the phased plan relating to the licences. Huite Zijlstra attended on behalf of arte Verde s.a., also present were Ing. J F Nicolas, Topographer Jose Orozco, Geologist Felipe Leon, Dr Alan Astorga and Jos van Veen. All the remaining steps came under discussion during the meeting. A company will be set up to manage the provision of water to the project. This is a statutory requirement in Costa Rica, and a private water supply company will therefore be set up for this purpose. The association will be shareholders in the company. Geologist Felipe Leon has investigated the quantity of water available on the Finca and in the immediate environment, and his findings indicate that there is ample water available for a large-scale project. The expectation is that steps 1 to 11 will be completed during the month of November (see the organigram included in the previous newsletter). If we can continue at this pace we will have completed all the necessary stages by March 2009, and we can make a start with the individual registration of plots on the land registry.

Maintenance

Maintenance In technical forestry terms, the Finca is currently in very good condition. We have experienced some difficulties in receiving the payments for forestry maintenance to Costa Rica, and it is probably a good idea for the association to jointly collect the as yet unpaid maintenance monies for 2008 (which will also save on bank charges), and then to swiftly transfer these to the maintenance company in Costa Rica. This is important because lack of maintenance can result in excessive weed growth between the healthy trees. This means that the vital moisture and nutrients are shared with the elephant grass, with negative consequences for the healthy trees. Maintenance is also important to allow the topographer to carry out his measurements, which are needed for the recording of the plots on the land registry. We would therefore urgently call your attention to the need to get the maintenance funds together as speedily as possible.
Prices Despite the international financial crisis, land prices in Costa Rica continue to increase. Costa Rica continues to be the most popular investment destination in Central America. We have observed this over a period of years, but we also hear similar reports from a variety of Chinese and American financial news sources. The prices of plantation timber have also risen explosively in the last year. Timber is a scarce resource, just like oil. It is also one of very few raw materials which has shown a steady increase throughout the last century, at around 6% per annum. In view of the fact that world population continues to increase, together with the pressure on raw materials from the new economies, you can anticipate that prices will rise with demand rather than falling. We can think in this connection with continuing expansion of economies like China, Russia and Brazil.

Questions from plot-holders: In this section we respond to questions from plot-holders.

• Q- What will be the arrangements for distribution of profits if the trees are harvested again in a couple of years?
• A- Because building will already be taking place on some plots by 2009, the profit from harvesting from a plot will go to the plot owner.
  
• Q- What about water and power connections and so on?
• A- Around $ 1,300 will have to be paid for each connection, regardless of the size of the plot. This is a one-off payment. The water and electricity consumed will also have to be paid for.
  
• Q- When will harvesting be required again?
• A- The next harvest will need to be done in around 3 years.
  
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