By Rick Valentine, president of Latitude Destination Properties
As an entrepreneur, I manage a real estate development company. In 2006, I entered a joint venture partnership on a Costa Rican real estate project called “Tranquilo.” Because the project location was the most beautiful piece of land I had ever seen, I quickly became emotionally and financially attracted to the project and its success.
Throughout the partnership, I took on all the responsibilities of sales and marketing, in addition to the rebranding and repositioning of the resort. Unfortunately, my development partner could not fulfill his obligations and was unsuccessful in obtaining the required building permits on schedule. As a result, we had to return all deposits received and cancel all contracts. I had spent more than US$700,000 and lost all of it!
Roughly two years later, after finally obtaining the needed permits, we brought Tranquilo back to the market. Every day, though, we have our difficulties; whether it’s keeping employee morale high, covering payroll or staying creative in our marketing efforts. And yet, my team persists and we are slowly, but surely, seeing the light at the end of the tunnel.
Here are a few lessons we learned along our journey:
- Give Them What They Want: By re-evaluating our target market and studying market and social trends, we created an offering that is aligned with what our consumers want today, not what they may want tomorrow. We used the down time as an opportunity to restructure and realign our offering with the market for which it was most relevant.
- Honesty is Truly the Best Policy: Our cash flow has followed a series of highs and lows. By being honest with my employees, there were no surprises, and this straightforwardness instilled an even bigger commitment and desire for us to reach our goals together.
- Leverage All Relationships: Because of Tranquilo’s uniqueness as a real estate project, I’ve been able to partner with several vendors and defer up to 80 percent of my costs in exchange for a larger fee paid from our cash flow. None of the vendors were in particularly strong cash positions either, but their struggles made them considerably more flexible than usual. By leveraging relationships, I saved nearly US$150,000 in 120 days.
Additionally, instead of spending considerable money on traditional marketing efforts, we have focused on leveraging relationships in our target markets. It costs nothing, and in these uncertain times, a referral lead has proven to be 10 times more likely to convert than a self-generated lead.
Have an Unshakeable Belief There was no shortage of people telling me I was crazy to bring this project to market during this dismal economy. Yet, I believed that we had an offering that was more relevant today than any other real estate opportunity out there … and it’s beginning to look like I was right.
I am happy to say that Tranquilo is moving along extremely well. Our efforts are paying off with regular sales and construction on the project is moving along. Furthermore, the team is engaged, our projects are the best in their markets and the results speak for themselves. Sometimes a down economy is exactly what people need to grow their business.