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Real Estate: Thinking of Investing in Caribbean Real Estate? What you Should Know
By Erin Bresnahan
If you've looked into purchasing real estate in Caribbean, Central America or Mexico, you've undoubtedly wondered which destinations are best suited to you and will offer the best investment opportunity, where to find the best property listings, whose help you should enlist during the purchase process and how long the whole cycle will take. We’re here to demystify the process of buying in the Caribbean, and as a start here are a few important things you should consider when searching for Real Estate in the Caribbean, Central America and Mexico.
1. Show me the Beach: Many people are initially looking to buy property right on a gorgeous, sandy beach but find that pricing in warmer climates has become quite prohibitive. Consider the advantages of not owning property on the beach: elevation often lends itself to more spectacular views and fewer mosquitoes, maintenance may not be as frequent and extensive and you may be more protected in the event of inclement weather. The biggest advantage, of course, is that properties are often a fraction of the price!
2. Law and Order: Each location will generally have its own set of laws governing the purchase and sale of Real Estate. For example, some destinations including the British Virgin Islands and Anguilla require non-national purchasers to obtain an Alien Landholder License, which is essentially a permit to own property in that location. In Barbados, the Central Bank must grant permission to any non-national wishing to purchase property. In Mexico, property is most frequently purchased by foreigners in a bank trust, or Fideicomiso. It is highly recommended to enlist the services of a local attorney who is familiar with the nuances of their respective jurisdiction.
3. To Tax or Not to Tax? Tax regimes vary greatly from location to location and you may find a vast difference in the amount of tax you will pay to buy the property (also known as transfer tax or stamp duty), to own the property (property tax, income tax) and to dispose of the property (capital gains tax). Investigate each destination thoroughly to get the entire picture on the cost of buying, enjoying and, if you wish, selling your property.
4. Financing in the Islands: Some buyers are in a position to make a cash purchase. For the many that are not, financing becomes a pivotal part of the purchase. While some destinations are quite readily willing to finance a large portion of the purchase, such as the US Virgin Islands, other spots will offer either very expensive financing, financing for only a portion of the purchase, or none at all.
5. Renting your Property: Many buyers purchase property with the idea of renting it out on the short term rental market, and many villas do in fact become quite successful rentals. If this is your goal, consider the markets you’ve short listed for a purchase. Markets such as St. John, St. Barth’s, St. Martin and Barbados enjoy strong demand for short term rentals, but you will often see higher asking prices for the privilege of buying into a developed tourist destination. Less developed areas such as parts of the Dominican Republic and Central America will often offer lower asking prices, but may present a more risky proposition if your goal is to fill the villa with rental guests.
6. Enjoy the Ride: Doing business in a new jurisdiction is always a learning process for first-timers, but many have found that with the right help, it’s a smooth and worthwhile one. When the title is transferred and the property is officially yours, take a moment to sit on your verandah, enjoy the views and congratulate yourself on a job well done.
Our Real Estate department here at CaribbeanWay is here to help throughout the entire purchase process, including:
- Finding the right locations to suit your needs based on your criteria
- Sourcing properties in those respective destinations and pre-screening them with you
- Organizing an itinerary for property viewings in those short listed locations
- Working with you and our on-island affiliates to take you through the sale seamlessly once you’ve found the perfect property
- Demystifying the laws, taxes and processes involved with purchasing in various locations by providing you with detailed information on the important aspect of purchasing in each location.
Browse a selection of available villas throughout the Caribbean at our Villa Sales site; you can reach us at (877) 953-7400 ext 240 or by e-mail. We look forward to answering any questions you may have and to assisting you in owning your own corner of paradise.
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