We ended up at the Outsider Inn/Hosteria Outsider last minute when we needed to stay in Puerto Varas so that we could catch an early flight the next day. From the outside, my expectations were fairly low. It's located on a busy street and the facade wasn't too impressive. However the value, the customer service, and the actual state of the inside definitely made up for it.
Make no mistake, Hosteria Outsider is fairly basic. It's located upstairs from a travel agency and restaurant and there are private rooms w/ bath along the perimeter of the central room where there are tables for breakfast (and is pleasant enough to sit in at other hours to relax). All but one room face out onto the busy street, the does get quiet at night after the minibuses stop running. We got a room with a queen bed and the bed was comfortable. The room itself was a bit small, but the bathroom was big and the shower had great water pressure. The room in general was clean and pleasant, but no TV and not very conducive to hanging out.
The breakfast was simple, but good. And for the price, Hosteria Outsider is a great deal. We also had a great experience with the staff. However, we did not need much guidance from them for booking tours or anything like that, so I can't attest to how helpful they would be in that regard.
Overall, if you need a simple, clean, affordable place to stay in Puerto Varas, Hosteria Outsider is a good choice. But if you want/need more than just a comfortable place to sleep or something with more amenities, I would opt for a larger hotel.