South of the Border

South of the Border

By Mark Gordon

Managing Editor

Joe Bartel admits he was a tad skeptical when approached about selling homes in Ecuador. The New Jersey native quit working as a lawyer in New York City last year so he could build condos in Punta Gorda and other booming Gulf Coast communities.

Ecuador wasn't on his radar screen, much less his map.

Still, Bartel hopes he is on to something. Partnering with a former Sarasota-area resident, he has set about selling 24 properties in Vilcabamba, a mountainous village in the southern region of Ecuador, a South American country off the Pacific Ocean that counts Colombia and Peru as its neighbors.

The sites can hold homes as large as 3,000 square feet and are selling for prices starting around $100,000. Eye-popping numbers when held up to the Gulf Coast, where $100,000 might not get 300 square feet in some spots.

Bartel looks at the opportunity as giving people the paradise-like qualities of the Gulf Coast without the pitfalls Floridians face on a yearly basis, things like sweltering summers, red-tide and of course, hurricanes.

"In contrast to the hurricanes and humidity of Florida, this is a real retreat," says Bartel, boasting of year-round climates between 65 and 82 degrees, as well as limited rainfall. "You don't get many chances to do a project like this in a place like this."

Bartel is one of a handful of developers on the Gulf Coast selling or developing residential property in South and Central America. For out-of-the-box - and country - thinking entrepreneurs, these projects can be unique and exciting. Lucrative, too.

But these developments also present challenges, from language barriers to shady banking practices. Another problem looming over most developers selling projects internationally is convincing people that basic American amenities, such as health care, qualified airlines and good drinking water, can be found outside the United States.

Sarasota developer Mark Miller, head of Westwater Construction Inc., is working on a project in Costa Rica. The property is in Playa Garza, a fishing village along the Nicoya Peninsula. Miller says the property could end up as a hotel, condominiums, single-family homes or some combination.

"It is a difficult process because you can't finance work there," Miller says. "You have to pay cash. So we're saving up. When we are there in December we plan to look at the property again."

Off the interstate

Like Miller, Bradenton-based builder Mike Carter has been branching out to Costa Rica for real estate opportunities. He is selling luxury homes in Quepos, a small town off the Pacific Ocean in the central part of the country. He says all of his buyers so far have been Floridians, including a banker and a doctor from Sarasota and an insurance broker from Tampa. Homes range in size from 4,000 square feet to 8,000 square feet; prices for lots start at $350,000, with a premium for ocean views.

Carter says Costa Rica is what Hawaii was 40 years ago or what Greater Sarasota was 25 years ago: peaceful, serene and an easy place to get business done. The Gulf Coast, while still a moneymaker for Carter, has become hyper-competitive.

Carter says his buyers are looking for spots in which they can vacation for a few weeks and then rent out the property for the rest of the year. He says Costa Rica is a perfect vacation destination for "those looking to get off the interstate."

Bartel pitches his Ecuador property the same way. The marketing of the project is in the early stages, but Bartel says he will look to sell in U.S cities with large Ecuadorian communities, including Chicago and Newark, N.J.

Bartel has been in the real estate business for just over a year. A graduate of Yale Law School, he practiced environmental law in New York, as well as commercial real estate law. He moved to Sarasota in 2004 and opened Elliot Watson Cos. - a name derived from his middle name, Elliot, and the middle name of his then-partner.

After a few local deals, including one in Punta Gorda, Bartel met Joe Simonetta at a college reunion. Simonetta had been involved in several wide-ranging projects, from writing books to running for Congress: He ran as a Democrat for the U.S. congressional seat currently occupied by Katherine Harris; he pulled out of the race in September 2003, prior to the election.

Simonetta, also a former executive at Sarasota-based Vengroff, Williams & Associates who now lives in Vilcabamba, asked Bartel, the budding real estate developer, what he thought about selling homes in Ecuador.

An authentic village

But Bartel, an even-keeled son of a real estate lawyer and Columbia University professor, was not as quick to jump into Ecuadorian real estate as he was to come to Florida in 2004. On the latter, selling real estate on the Gulf Coast was what Bartel called a "no-brainer."

Bartel changed his mind on the Vilcabamba project after visiting and touring the property with Simonetta. Even though he admits the village has a Third-World quality to it, he touts that fact as part of its charm, something different than yet another luxury condo on the water.

Bartel and Simonetta are not selling homes, just 24 lots where homes can be built. The land is inside a sanctuary, which has no traffic passing through, only a public road leading to the entrance. Mountains cover three sides of the village; the Vilcabamba River is on the fourth side. The valley ranges from 4,839 feet at the bottom to 6,512 feet at the top of the mountain.

Home sites will be bordered by wilderness and can be near the river, according to the project's Web site, www.vilcabambahomes.com. Bartel says other features of the properties include fertile growing soil, where in combination with plentiful sunshine and water, residents can grow a wide range of fruits and vegetables, including avocados, bananas and lemons. Not to mention coffee beans.

Bartel says he hopes the project will appeal to people looking for rustic, authentic, natural village living. He thinks some will live there year-round, others for part of the year. Bartel says a few Americans have already begun to move to the area, including a former NASA astronaut who was part of the Apollo program and Jon Cypher, an actor who starred in soap operas and played Police Chief Fletcher Daniels in the 1970s TV hit Hill Street Blues.

'Ollie's Strip'

Despite the multiple selling points, hawking real estate in Central and South America has some challenges. Miller, Carter and Bartel all emphasize the importance of getting top-notch trustworthy help in the country, including architects and accountants (see "How to Develop Abroad" for more tips).

Miller says the first hurdle for him in Costa Rica was that foreigners can't own land in their own name. He got past that by owning a corporation in the country, which Americans can do, and then setting up the land. Miller followed that up by getting a "really good, honest attorney" to help with banking and financial decisions.

Miller's project in Costa Rica also crystallizes a possible problem any foreign developer can face: how to get there. Miami and New York are two of the more prominent airports with airlines flying to countries such as Ecuador and Costa Rica. But getting to some of the out-of-the way paradises these developers are selling often calls for another ride on a smaller plane.

In Miller's case, to get to his property, there is a 30-minute flight from San Jose, Costa Rica's capital and main city. The challenge is not so much the cramped flight in a tiny plane, Miller says, but the landing site.

Miller says the airport in Playa Garza is more of a dirt road than a concrete roadway. There is no air-control tower. There are no baggage handlers. About 20 years ago, then-White House aide Oliver North used it to land helicopters for government projects. Local residents there, Miller says, now affectionately refer to the so-called airport as "Ollie's Strip."

One more issue Miller and others face is crime in these countries, or perceptions the areas are unsafe. Carter says the town in Costa Rica where he owns property has a low crime rate, with the only problem being petty thefts. Bartel, too, says Ecuador has a low crime rate.

Miller approaches the crime issue in the same way many do in the United States by being aware of surroundings and using common sense.

"There are some bandits and thugs in the city," Miller says, "but as long as you know the rules, you are OK."

While the potential success of these projects motivates the developers to keep going, they are not looking to move full-time to international real estate. Bartel says he wants to see this project through and then see what other opportunities come up; Miller shares those feelings.

Carter, too, is going to complete his project in Costa Rica before getting into more foreign developments. Still, Carter says he hears Panama could be the next big thing, with political stability, a good infrastructure and an aggressive tourism push.

Real Estate Editor Sean Roth contributed to this story.

HOW TO

DEVELOP ABROAD

Here are a few tips Gulf Coast developers have learned from experiences in Central and South America:

• Get good help: Joe Bartel, a Sarasota developer selling property in Ecuador, says there is "no substitute for having a reliable person who speaks your language supervising an overseas project." Literally and figuratively. Other Gulf Coast developers selling projects in Costa Rica say the trick is to get help that can speak the local language as well as the business language of making sure projects get done on time and by the budget.

• Use established banks: Mark Miller, working on a project in Costa Rica, uses a bank that has offices in and out of the country. Miller, head of Sarasota-based Westwater Construction Inc., says some local banks do not have the same policies American banks have.

• Know the rules: Some countries have tough development rules, others are more lax. Mike Carter, head of Bradenton-based Mike Carter Construction, says he goes through zoning and planning hoops with his Costa Rica project just as he does with projects in Manatee County.

• Be nice: Bartel says after learning local customs and traditions in Vilcabamba, Ecuador, things came easier to him and his partner: "We've found that help comes at you from many directions at once if you strike up real friendships with the locals," Bartel says. Carter, too, has found that once you prove yourself by being honest, the help you get back in return is essential.

• Location, location...The old real estate axiom holds true outside the United States. Miller spotted his property while surfing in the late 1980s, and it has grown into a hot spot over the years. Bartel says developers should give people a "good reason to venture into new territory. Never forget that it's always easier for an American to stay within the country when looking for property."

- Mark Gordon