The response to our new investment fund has been overwhelming, with more potential interest than we'll ultimately need. Almost all of the 10 slots for the new fund are in fact tentatively filled with verbal commitments, but a few slots remain open, and of course no slot is officially taken until funds have been invested. Before the fund officially launches, though, we want to publicly answer all of the most common questions we've received. Afterward, we ask each of you who want to invest to confirm your interest so we can email you by-laws and other copies of corporate paperwork for your perusal, and then move to raise the funds and officially launch. 

Now, the fund overview again, and then your questions and answers:

Fund Specifics: This is a $500,000 fund, made of 10 investors who invest a minimum of $50,000 each. If someone wishes to invest more than $50,000, we may have fewer than 10 investors, or the fund may be slightly larger. 

Investment Objective: To purchase grossly undervalued properties – both land and homes – in Costa Rica, both along the Pacific coast and in the Central Valley. We seek properties that should be able to provide at least 50% to even 100% returns or more on investment per project within months, mostly because they're undervalued to begin with.

Timeframe: The fund will have a three-year minimum investment period. We ask that investors commit their funds for this amount of time. (But more on this below. There is some flexibility.) 

Fees and Expenses: The fund managers collect 50% of the net profits of the fund, but also cover all of the general expenses of the fund itself and do all of the work. After paying for expenses, fund managers will more likely collect about 35% of the true net profit. All random expenses (fuel, lodging, meals while seeking properties, etc.) are covered by the managers. So, the only additional expenses covered by the fund itself are incorporation and attorney charges in direct relation to fund activities, annual taxes on the corporation, closing costs on properties, and any costs to directly improve the resale value of any property, or to maintain any purchased property. There will of course be some other unforeseen miscellaneous expenses that fall under the fund's jurisdiction to pay, but they should be minor. Overall, general fund expenses should be a very low few percent – at most – of the fund's total value.

Return Objective: Given that we hope to return at least 50% per property, and close on a small handful of properties (3 to 5) per year, the total return in three years could be a double or even greater for all involved, even after profit sharing. 

Reporting Commitment: Fund managers will update all shareholders whenever a transaction closes; we will provide more detailed updates on transactions and financials every quarter (every three months), and provide more completely detailed financials once a year.

Corporation and Taxes: The fund will be incorporated in Costa Rica as a S.A. (the equivalent to a LLC in the States). All assets will be owned solely by the shareholders, making this fund 100% collateralized by hard assets. The fund managers will not own any of the assets, but will have a contract to collect a percentage of profits that the fund generates above the starting value (now assumed as $500,000). There are no capital gains taxes in Costa Rica. It is up to each shareholder to report gains, when the fund closes, to their respective government. The fund will not do so. 

Withdrawals: We ask that investor monies be invested for three years from the launch of the fund, to provide ample time to generate returns, and to assure that investors won't be asking for their funds when the funds will likely be tied up in properties. Knowing that we close the fund in three years, we can make sure to be completely liquidated by that time. This said, if you have a financial emergency and need your funds, IF there is liquidity and the fund will not be harmed, we can return your investment base to you early.

Fund Manager Dispersals: Fund managers reserve a right to withdraw no more than 15% of total net profits per year (each January), and reserve this right as primarily a way to reimburse the meaningful expenses the managers themselves will incur running the fund, and to pay for the significant time involved in this project. This said, fund managers will avoid any early withdrawals if possible and feasible, to allow all fund assets to compound further. This is to the benefit of everyone, including them. Any early withdrawal will obviously count toward the fund managers' total profit-sharing in the fund. 

Paperwork: All paperwork, including corporation papers, shareholder certificates, corporate by-laws and registration with the Costa Rican government will be held by our attorney's office in Grecia, Costa Rica, available for any investor to see. The names of other investors will be made available, but only if those investors agree. All accounting and paperwork will be continually available and accountable.

Fund Closure: After three years, the managers have an option to offer a continuation of the fund, which investors may or may not accept on an individual basis. So, after three years, each investor will have the right to receive their total proceeds and their original investment. But if the fund managers decide to offer more time, each investor will also have a right to continue all or part of their investment and/or proceeds for another period of time to be determined at that point.

Now, let's run down some Q&As in quicker fashion, repeating some, because it can't hurt: 

1) Some of you asked about the possible deaths of the fund managers (shudder). Each of the three managers will have a will and the bylaws will state that in the event of the death of one manager, the other two must be in total agreement about the direction of the fund. In other words, continuation must be agreed on or the fund will be disbanded and profits disbursed as soon as possible.
2. Again, early withdrawal can be done if need be but will be done ONLY if the withdrawal does not affect the overall performance of the fund and its shareholders.
3. The general partners (albeit non shareholders) MAY withdraw limited funds (defined as 15% of their combined share in the profits per year) earlier than three years if so desired and if need be on their part to help defray their own costs and provide them cash flow as they manage the fund. This is defined as only the profits which would accrue to the general partners anyway, and these funds may be withdrawn only if such disbursements would not unduly affect the performance of the fund. Any early withdrawals by the managers are primarily viewed as ways to pay back their expenses and pay for their time, but it remains in the fund managers' best interest to keep all funds compounding.
4. A status report of the fund can be requested by any shareholder at any time. A response will be given within two weeks. Regular updates will be quarterly and annually.
5. Confirmations of purchases and sales can be seen and confirmed at any time via digital reproduction or by confirmation with our company attorney, Luis Alfaro in Grecia, Costa Rica. 
6.  Shareholders will be given other shareholders names, emails and telephone numbers... but only if the individual shareholder agrees. 
7. Each individual's shares will be property registered in the corporation but, outside of the corporation, will not be divulged without consent. The books will be kept in our attorney's office and be maintained and kept up to date. It should be repeated here that we will not send out profit and loss statements to appropriate governmental agencies outside of the country of Costa Rica.
8. It should be stressed that all transactions which will be undertaken will be totally legal and in accordance with the laws and regulations of Costa Rica and will be passed on by our attorney. We are very aware of our fiduciary responsibility and, while not governed by the SEC, are aware that our actions will be held accountable by investors. We are accustomed to such accountability and welcome it.  

Examples of Opportunities
A few of you asked for investment specifics, such as, "Can you give examples of how the investments would work – what types of opportunities you see?" 

Yes, it is a broad question, but the best way to answer is as follows. These are just some of the varied opportunities we see right now:

1) Purchase: fixer upper in San Miguel de Grecia , approx.700 meters of land and 800 sq. feet of home, 2 BR, one bath, kitchen, LR.  Cost : about $17,000. Renovation: raise ceiling, put wood tongue and groove in; put porch and deck in back to take advantage of gorgeous valley view. Cost of reno: $4,000. Estimated time of investment: 2-3 months.   Sales price: $36-42,000. Return: up to 100%.  

2) 3HA (7 1/2 acres of land ) along the coastal highway near Parrita and Hermosa. Right next to a gorgeous, larger river. Land very accessible and planted in bananas primarily at present but not really farmed. Cost: $40,000. Split land into three parcels. Sell each for $30-35,000. Land is absolutely stunning. The area is known but primarily for oceanview properties and at least half of the developments have NO ocean view whatsoever. This is a superb opportunity, and could produce a greater than 100% return within several months. 

3) Smaller piece of land near the popular beach town of Jaco, and only 100 meters from the ocean. A definite fixer upper but gorgeous view of the ocean, and the area is in the process of rezoning in anticipation of the new highway from San Jose and the overflow of tourists from Jaco only 15 minutes away. The area's second most expensive real estate is here within a quarter mile of this home and neighborhood and that expensive real estate has NO beach access. Purchase for less than $25,000 and either hold  or remodel. Hold time estimated at one year and minimum 50% return, or remodel for at least 75-100% return... estimated hold time at six months. 

These three opportunities would invest about $86,000 of the fund's money to begin, for example, while several larger opportunities (including larger pieces of land) are also being looked at. These are actual, real-life examples of opportunities available NOW. They are similar to what we will be doing.  

Confirm Your Interest with Us
At this point, we hope that we have answered your questions. If not, just ask us. But if so, then Please Email Us Here to confirm your interest in the fund. Doing so, we will e-mail you a copy of by-laws and a copy of incorporation papers for you to look over within the next 10 days. So, please, at this point, only email us if you're sincerely interested in investing. We must move forward now to officially fill the few slots we have open, and confirm all 10 slots for certain. At that point, the fund will be closed and we'll quickly move toward launching it. 

Thank you for your interest from all of us at CR-Home!

Randy, Jeff, and Steve