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Best place to buy a vacation property I can also rent out...with a twist

Best place to buy a vacation property I can also rent out...with a twist

Old Apr 24th, 2016, 01:53 PM
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Best place to buy a vacation property I can also rent out...with a twist

I am looking to buy a property that I can rent out when I'm not there.

The twist is my sister's family are also looking and would also like the same thing.

As we will be usually traveling there at the same time (and they have a large family) we are both looking for our own places, close to one another.

Looking for a nice place, for the best value, that can also easily rent out when we are not there.

Thinking of Dominican Republic, Barbados, Costa Rica, Turks and Caicos, or Aruba.

Does anyone have any experience with this?
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Old Apr 24th, 2016, 04:43 PM
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First, people have been purchasing properties in the Caribbean that they rent out in the same areas where relatives or friends have purchased properties for as long as properties have been marketed so what you are contemplating isn't unique and doesn't have a "twist".

Second, there is no single "best" island to for purchasing property there are only different islands. You really have to investigate each island to see which one YOU think you will enjoy living on and will fulfill YOUR needs. For what it is worth, we visited over 20 different islands before we found the right property for us.

Every island has "nice places" but that, of course, depends on your definition of "nice". You'll find everything from one room studio condos costing as little as say $50,000 to massive multi-bedroom villas costing as much $10 million or more.

As far as "best value" goes, that too depends on your definition. Generally speaking you are probably going to find that properties in the Caribbean are priced higher than comparable properties in "any town" in the country where you now live. Whether that means they are a "best value" is something you'll have to decide. Of the islands you listed in your post the Dominican Republic and Costa Rica will probably offer what you consider the "best value" simply because they are relatively less expensive destinations compared to the others and they will have a greater number of properties to choose from. By contrast Barbados and the T&c's (I assume you mean Providenciales not one of the other more remote islands in the chain) will have more expensive properties.

Now, you'll generally find properties on the larger more frequently visited islands will have greater rental potential than properties on more remote islands but "rentability" of any given unit depends "Location, Location, Location" as well as time of year. Peak rental times in the Caribbean are usually the 16 weeks or so between Christmas and Easter. If you plan on using the property yourself during those times you lose out on potential rentals. Rentals tail off considerably during the remainder of the year and are often non-existent during late summer until just before Thanksgiving.

Another thing you'll have to consider is whether or not you purchase your property for "all cash" or if you intend to finance. If the latter, you'll have to investigate whether or not you can qualify for a mortgage loan from a bank that operates on the island where you are purchasing. It is often very difficult or even impossible to get a mortgage from a bank in your own country to purchase property in a different country (and every destination you've listed is a different country). Keep in mind that many banks WILL NOT consider income from potential rentals as income to help you qualify for a loan.

If you plan on renting your property you'll need to hire a local property/rental manager to take care of your property and find you tenants - expect to pay anywhere from 35% to 45% of your rental income for this service. Some owners rent through VRBO to save on rental commissions but it takes a lot of time/effort to do that and you'll still need a local representative to take care of repairs, maintenance, and upkeep.

Lastly, rental properties get much more wear & tear on furnishings and appliances than non-rental properties since many renters are notorious for abusing property that isn't theirs. Also, because of exposure to salt air, strong sun, sea spray, etc. Caribbean properties require more maintenance than homes where you probably live you can expect to repaint, re-frabric and replace furnishings and appliances more often than "back home".

Do as much "first hand" research as you can BEFORE making any decisions and then do more research. Start by Googling subjects like "Owning a rental home in the Caribbean", "Living on NAME OF ISLAND", "Buying Property on "NAME OF ISLAND", etc., talk with owners/landlords on the island you are considering to get their input, talk with real estate agents to get their side, study everything you possibly can.
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Old Apr 25th, 2016, 02:11 AM
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For me it would be in a country that :
I can access relatively easily in case.
I understand the language
I understand the law

Thus for me guadeloupe Saint Martin saint Barth etc.
for you ?
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Old Apr 25th, 2016, 03:18 AM
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If you need a mortgage, many get part of it as a home equity from existing home where they live to supplement

Triple your budget--if mortgage is $2000, expect $6000 in monthly bills-- property managers average 15-25%, utilities are high (think $1200-1500 electric, $350 water, etc). For successful rental you need pool, pool cleaning $200, then you need landscapers $400 monthly. These are averages (and mortgage will be more than $2000, just an example)

So expect to break even around 5 years, and that's if you work hard at it like a second job.

If your sister ends up more successful than you or vice versa, keep in mind that could be trouble-- but that's for Dr Phil (since you have the twist)

It is a lot of work! Like a second full time job.

Be prepared for your friends to be different (again dr Phil)

Sounds negative, it really isn't-actually amazing. But want to bring up its not "buy and forget yet reap the rewards." You need a lawyer, you're investing in foreign land. You'll need to find about shipping things down (all the time)

So rule #1 buy because you love (and maybe want to retire) not as investment. You make money only when you sell it at a profit (capital gains)
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Old Apr 25th, 2016, 03:22 AM
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And because of rule #1 you need to go fall in love with the island, not just randomly choose one. After you find which island, it still takes time to find the perfect property

So the process is years-- and getting papers in order can take a year

So travel first!
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Old Apr 25th, 2016, 07:46 AM
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One more caveat, take what real estate agents tell you with a grain of salt. They will tend to paint a very rosy picture when it comes to estimating the rental potential of a property. They will overstate income and understate expenses. Remember they make money selling/ managing properties and are happy to let you foot the bill.

When doing your research you'll get estimates in "ranges" such as utilities may run anywhere from $1,000 to $1,500 per month. Human nature being what it is you'll focus on the lower amount but the reality is going to be closer to the high end of the scale.

Once you've compiled all your financial data and think you are ready to proceed do the following test: Recalculate your budget but this time increase your expenses by 15% to 20% (there are those range estimates I warned you about) and decrease your expected net income by a similar amount. If the revised bottom line numbers don't scare you then you are good to go.

Nothing is cheap in the Caribbean - you'll pay a premium for everything.

On last comment - If you are married or in a committed relationship make sure both you and your spouse or partner are 100% on board with owning a home and living in the Caribbean. I know many a couple where one party loved Caribbean life and the other dislike it intensely. Better to find that out before you buy rather than after. It might be wise to rent a place for an extended period on the island you are considering before purchasing property - just something to consider.

Good luck following your dream. I hope it works out for you.
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Old Apr 25th, 2016, 09:54 AM
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Hawaii
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Old Apr 25th, 2016, 10:36 AM
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<Thinking of Dominican Republic, Barbados, Costa Rica, Turks and Caicos, or Aruba.>

Which of these islands have you visited already?

Which ones did you like best?

I would not purchase anything anywhere in the world myself unless I had vacationed there at least a dozen times in various rentals situations and locations to see how the place felt to ME.
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Old Apr 25th, 2016, 01:16 PM
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Also, some countries are a royal PIA to do business in. From what I gathered visiting the Doninican Republic, it's pretty corrupt, and you need to know that before any money changes hands.

That's why I recommend Hawaii.
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Old Apr 26th, 2016, 09:08 AM
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Sure I don't disagree with the idea of Hawaii, as the easiest place to buy property and do business for US citizens.

My point is that before buying *anywhere* I believe you should have spent significant time in residence there prior to making a purchase.

I'm wondering why they mention those particular 5 islands, if they have spent time on them already and enjoyed a specific town or area?
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Old Apr 27th, 2016, 01:36 PM
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"My point is that before buying *anywhere* I believe you should have spent significant time in residence there prior to making a purchase."

Absolutely. Go there for at least a few months, to decide if you want to buy there.

My friends live in the Dominican Republic, @ Casa de Campo. It isn't really like living in the DR, though, because it's an enclave where mostly retired (white) people live.

The "golf villa" they have is very nice. I think it rents for $500/night, for 3 bedrooms, 3.5 baths, nice garden and small pool. Includes their housekeeper/cook (she does not live in).
http://www.casadecampo.com.do/resort-villas/
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Old Apr 29th, 2016, 11:15 AM
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All very good suggestions listed above.

You also will need to consider whether there are property taxes as well as whether you will be liable for any other annual local taxes as a homeowner & landlord, including income tax. You should also be sure to understand the local laws relating to renting out your villa/home and be sure to get any required licencing. Make sure there are no restrictive covenants on your land title preventing you from operating as a short term villa rental business.

Also be sure to understand the local employment laws if you will be hiring staff.

Another thing to understand would be the laws regarding land ownership in the island. Different islands have different land laws and this may have implications for your estate planning. Be sure to consult with your attorney to come up with the homeownership arrangement that is best for your existing estate plan. You may need to even make another will governing the property in the island.

As another poster said, everything can be more expensive in the Caribbean because we mostly have to import pretty much everything which means paying customs duties and taxes just to get them into the island. So be sure to understand the customs/importation laws and costs as well. Note that the importation of some things may even require you to get a special licence.

Some islands will not allow you to import pets from certain countries-AT ALL, including the usa, so if you have pets you intend to take with you, be sure to check that out.

I think it's always best to buy into a gated community for several reasons, including security and lower maintenance responsibilities, but that's a personal decision for you.

As other posters have suggested, take a long term rental on the island of your choice, prior to buying. See if you like it, if your partner likes it and if it's something you really want to do as an owner. Talk to other home owners, both local and expat and learn from their mistakes and heed their advice to make your experience smoother.

Check out the cost of home owners insurance as well and be sure that whatever you get gives you good hurricane, flood, wind damage and fire coverage. It would also be good to be sure to ask the neighbours or anyone other than the realtor how the property fared in the last hurricane to hit the island. Do some research on that aspect as well to make sure you understand the island's location in relation to the usual path of hurricanes during the annual hurricane season. Also make sure your health insurance covers being airlifted out of the island if there is a medical emergency requring overseas care.

Remember that buying property closer to the sea means much higher maintenance costs because of the salty air. This air will affect pretty much everything, including your car.


Check the water situation since many caribbean islands have long periods of drought and water woes. Make sure you are able to have an alternative water supply if necessary. You may need to invest in a generator as well, as power supply problems are also usual on most of the islands and especially after a hurricane hits you may be without power for weeks.
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Old Apr 29th, 2016, 11:27 AM
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I personally will not live in a "gated community" and so in part is why I will be looking at retirement options in Mexico and Hawaii, instead of the Caribbean.
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Old Apr 29th, 2016, 11:44 AM
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Great for you suze. Have fun there.
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Old Apr 29th, 2016, 11:49 AM
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Well I wouldn't live in a gated community in the US either. If that is what it takes to be safe, I'd just look elsewhere. I obviously don't have the real-life experience you do in the Caribbean, and I didn't mean to imply more than speaking for myself only.
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Old Apr 29th, 2016, 11:52 AM
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Hit the send button too soon unfortunately...

Gated communities are sometimes good places to have second homes, especially where the homeowner may not have a property manager. Usually the community will have one gardening/landscaping company that does all the lawn cutting and tree and hedge trimming etc as well as pool maintenance services so that the home owner doesn't have to worry about those things. Similarly security concerns are reduced in a gated community usually. Especially for second homeowners who may not be around all the time.

But it all depends, of course. Gated communities do come with certain limitations as well.
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Old Apr 29th, 2016, 04:21 PM
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Everyone has made some great points. Too bad michaelsmithtravels hasn't come back to comment, ask more questions or even say thanks. Perhaps reading about the complexity of owning a home in the Caribbean has scared him away.
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Old May 3rd, 2016, 08:04 AM
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Maybe he's shopping for a house in Hawaii? ;-)
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Old May 6th, 2016, 09:31 AM
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A rent for sale property could be a good approach once you decide on the island you love.

This way if you find a rental that meets your requirements then there is the possibility to buy with previous rent amounts deducted. I've seen this arrangement more and more on Barbados.
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Old Jun 8th, 2016, 04:20 AM
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Great points, especially from RoamsAround. I have owned homes in the Caribbean and now own a condo on the beach on one island, since I live in Canada. It has worked out well for me personally on all fronts. I once considered purchasing another property in the US and after extensive research and for many similar reasons quoted above, came to the following conclusion which I have never regretted:
Rent, rent, rent then hand the keys over to the owner/landlord when you leave. That decision released me to enjoy several parts of the world for any length of time I needed and without the headaches of owning ANYWHERE. For me flexibility is exceedingly important.
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