Investing in a Luxury Paradise
Why buy Caribbean Property?
For many people when they think of the Caribbean, they picture a destination that is synonymous with luxury. White sandy beaches, clear blue skies and lush tropical greenery go hand in hand with a rich and varied culture. The Caribbean is a destination that is vibrant and diverse – amazing music, warm and welcoming people, exotic cuisine and incredible wildlife which all come together to create a unique place in paradise. This all adds up to the perfect reason to invest in Caribbean Property.
The Caribbean also benefits from a fantastic climate that ensures that all islands are a year-round tourist destination. Without the restriction of a short tourist season, the Caribbean is in annual demand, providing high occupancy rates and fantastic rental returns for investors. With flights also easily accessible from the UK and USA, and English being widely spoken, the Caribbean is a great investment opportunity with excellent communication and travel links.
Investing in the Caribbean is for many a lifestyle choice. Those who can afford to invest will either intend to enjoy the lifestyle for themselves or benefit from the enjoyment of others.
The stunning location of the Caribbean alone is an appealing offer to many when it comes to considering property investment. But the Caribbean also attracts investors as many properties are tailor-made solely with investment returns in mind. Furthermore, such properties that are available are more often than not anticipated to generate substantial returns for those willing to invest.
Many countries in the Caribbean also offer tax incentives to make investment there that more appealing. Often, taxation is very low or in some areas it is non-existent. St. Lucia for instance, is designated as having a tax-free status. Furthermore, on some islands, there are no inheritance taxes or capital gains fees to pay, making buying a Caribbean property therefore a very attractive proposition compared to properties in other countries.
It is always advisable before buying any property abroad, be it the Caribbean or elsewhere, that you first need to decide on the place you are considering buying, and then research all that can be found out about the property and the area, as well as taxes and legal issues.
In buying an off-plan (pre-construction) property, generally the investor is required to make staged payments. These usually consist of an initial ten per-cent deposit up front, followed by the remainder depending on the property type.
Purchasing new build homes also requires a solicitor to check for the Register of Title. When doing so, the recommended option is to hire the services of an independent lawyer rather than one recommended by the developer, so that a conflict of interest does not arise.
When buying a resale property, investors are best advised to acquire a solicitor as soon as the price has been agreed. Similar to off-plan properties, a ten per-cent deposit needs to be paid on signing the purchase agreements. However, this money is then held in the seller’s lawyer, until the balance is paid on completion of the property where in turn it is all transferred to the seller.
Purchasing Caribbean property generally comes with much less red tape then buying property elsewhere. Therefore, the complete purchasing process for a resale property, takes approximately 3 to 4 months.
Knowing the costs that will be involved in investing is a very important first step before committing to a property. It is impossible to give a generalised view of what costs will be involved in property investment in the Caribbean as they vary considerably from island to island and region to region.
However it is often a good idea to consult an estate agent or contact the developers or the property to seek out advice. If you do use the services of an estate agent however, it is vital that you check to see if they are with a registered Estate Agency. Also ask if they are a member of a regulatory association e.g. the Association of Real Estate Agents (AREA) in Trinidad and Tobago.
Do not be afraid to ask the basic questions – How long have they been in the business? Can they provide references of previously satisfied customers? Do they charge their commission to the vendor or to you the buyer? Do they charge for viewings of the property?
Above all, ensure that you are completely satisfied that the people you hire are doing the very best job they can for you.
It is also vitally important to be aware of the many legal issues that come with buying property in the Caribbean. The legalities of each island differ enormously, so it is imperative that potential investors seek advice from local lawyers before committing to any purchase. This is important also as some islands do not allow foreign solicitors to even practice so local knowledge and local advice is crucial.
Points to Consider
When investing in a property abroad, the Caribbean or otherwise, it is highly recommended that you follow these five different steps so as to avoid potential pitfalls.
Understand what you are doing
It is vital when investing in property that you know what you are doing. Buying property abroad is not the same as buying it in the UK or USA. If you are not sure of what is involved, consult someone who is knowledgeable on such matters. If at any time when you do not like the direction the investment is heading, or it seems too risky to invest in the first place, seek advice and pull out of the proceedings if necessary.
Be aware of the market
The property market is always changing and the prices that properties are bought and sold for can vary depending on the current economic climate. Few are able to call when the market is about to peak or about to take a dip, so be careful. It is far simpler and safer to know the local market pricing and see if you are buying at a fair price. Buying a property at an inflated price can be hazardous if you intend to sell it on again in the short term.
Keep fees to a minimum
It is essential when investing in property that the buyer keeps costs to a minimum. However, these cost-cutting measures should not be to the detriment of seeking good advice from an agent or getting independent legal advice. Often these do not cost any more than buying the property directly.
Keeping costs to a minimum, especially on setup, allow many investment opportunities to be highly viable sources of future return. The less the setup costs are in comparison to the profits made from re-sale, the higher the return on the investment there will be.
Unless you have experience of the property investment market, it is recommended that you keep focus on one property investment at a given time. Buying property in multiple countries will bring with it different sets of legislation, buying processes, and variable third parties which need to managed carefully. Otherwise, potentially extra costs and set-backs may become a factor if not handled successfully.
Be careful how you invest
It is important when investing that you do not let seemingly attractive incentives affect your judgement. Far too many investors may focus unnecessarily on tax avoidance, and can affect their ability to identify a good investment. The property you buy may end up being tax-efficient but not actually a good investment. Moreover, never invest in a property that will drain your resources rather than enhancing them. Buy good value, not the one that would appear to be the cheapest. A property that is slightly more expensive might have a higher rental return than a much cheaper one.