Purchasing island rental property in Caye Caulker, Belize

[B0at1n]

So, two years ago on a cruise we stopped at an island for lunch on one of the snorkeling excursions we did, we thought the place was great. Over the last two years, we thought it would be cool to have a vacation home on the island, the island was Caye Caulker Belize.

Now, like anything big I buy, including the boat, I want to make it an asset and not a liability if at all possible. So, with the boat I am starting a rental business that will hopefully cover the cost of ownership and maybe bring income down the road. (Yes I am willing to trade some Dings and scratches for a free boat, or a business that will buy me a boat that is only used by me)

So to my questions. Does anyone have experience owning property out of the country?

What were the risk and troubles you faced?
What advice would you give me?

A little background on the potential property.

I am looking at a condo, the developer is also the property manager and states he is planning to stay around self managing for many years to come.

The offer is between 30-40% down and he will private finance the rest at 3% for up to 12 years.

He said out of the 14 owners currently, there are about 35 units. He is stating that barring them putting restrictions on him of what he can do with the room pricing to keep it full he has been able to get 95% plus occupancy rates. With that, those who let him run it have not made a single mortgage payment or Incured extra cost out of pocket after their initial payment. So basically you are buying the unit at 40% of it’s value and giving him 12 years (or less) to Rent it while your not using it and paying off the property as well as putting money in your pocket each month.

This is a surface explanation. Anyone with experience in owning foreign property, I would love to pick your brain about this and I will give exact numbers.

Thanks in advance for any help.

 

[Scottintexas]

With that, those who let him run it have not made a single mortgage payment or Incured extra cost out of pocket after their initial payment. So basically you are buying the unit at 40% of it’s value and giving him 12 years (or less) to Rent it while your not using it and paying off the property as well as putting money in your pocket each month.
QUOTE]
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I wonder if you would have taxes owed to the belize gov't, if you would have to setup some sort of LLC or similar or have to pay income tax??

I'm always concerned when it sounds really good, if he's keeping it 95% full why isn't he keeping the units for himself and all the money instead of selling his cash cow

 

[mdchachi]

Although I have no experience here the risks to me are:

1. Maintenance, upkeep. (What happens if a hurricane goes through there. Or it gets older/rundown).
2. Developer skips town after he sells all the units and has all those 30-40% down payments in hand. Probably little recourse for you.
3. Property ownership/management changes hands to somebody unscrupulous or who runs it poorly.
4. 95% occupancy rate sounds far fetched to me. Belize is not that hot of a destination is it? And even popular destinations have off seasons. And as it gets older or newer competing places hit the market, it will put downward pressure on rates/occupancy.

How often can you get down there? If it's only once a year, I'm sure it will be far cheaper to rent lodgings as needed. And then put the money saved into a real investment.

Plus you're not locked into going to the same place all the time. (I know a lot of people do this but it's never appealed to me. We like to go to different destinations year to year.)

 

[B0at1n]

I wonder if you would have taxes owed to the belize gov't, if you would have to setup some sort of LLC or similar or have to pay income tax??

Although I have no experience here the risks to me are:

1. Maintenance, upkeep. (What happens if a hurricane goes through there. Or it gets older/rundown).
2. Developer skips town after he sells all the units and has all those 30-40% down payments in hand. Probably little recourse for you.
3. Property ownership/management changes hands to somebody unscrupulous or who runs it poorly.
4. 95% occupancy rate sounds far fetched to me. Belize is not that hot of a destination is it? And even popular destinations have off seasons. And as it gets older or newer competing places hit the market, it will put downward pressure on rates/occupancy.

How often can you get down there? If it's only once a year, I'm sure it will be far cheaper to rent lodgings as needed. And then put the money saved into a real investment.

Plus you're not locked into going to the same place all the time. (I know a lot of people do this but it's never appealed to me. We like to go to different destinations year to year.)

I'm always concerned when it sounds really good, if he's keeping it 95% full why isn't he keeping the units for himself and all the money instead of selling his cash cow

Taxes in Belize are 9% (according to developer). No need for an LLC or anything u till it’s paid off.
There is an HOA fee of $225 a month, that covers grounds upkeep, insurance, water utilities, and taxes. Now if you bring the money back to the US then you will receive a 1099 and pay normal income tax.

The building is ocean front and made of 100% concrete with 40 foot peers into the ground. Should be able to withstand 150 mph winds.

The developer owns 9 of the units and says he doesn’t plan to sell them. I’m sure this will change just don’t know if that 1 yr or 15 yrs away.

Occupancy rates are high because in prime season Nov-April rooms are 150-200 a night and in off season he will go as low at $60 a night. He already has all of the big rooms booked solid through this prime season.

He gets. 20% management fee to do all advertising and property upkeep, so he is motivated to keep the rooms generating money. The more the better. There is the option to do this my self. But he said all of the owners that tried haven’t done as well as him in most cases and the onees that have did just about the same as him. But they had to do all the work, he said they are all using him currently now.

As far as how often we can visit, would prob be twice a year. Part of that will be me trying to get the numbers to where those trips are covered by the profits off the rental.

 

[Scottintexas]

I think I might try to talk to a couple of the other owners, especially if you can contact them without him knowing,
he's only going to give you contact info for the ones that will recommend him,

one scam might be sell it to you, it doesn't rent out as much as expected then after a few years he buys it back at a discount, you've paid HOA fees to him every month and he gets 20% on any rentals plus he buys it back at a discount, after a few buy backs he really would be making money,

 

[Matt Phillips]

In hurricane country, I'd go for a 2nd or 3rd floor unit. Even if the building can withstand a 150mph wind, I'd feel MUCH more comfy if my unit was NOT on the 1st floor when there's a10 foot storm surge coming through the area.

 

[seanmclean]

I'd be really inclined to speak with unit owners about their experience, surreptitiously if possible.

 

[robert843]

I would just reach out to a real estate attorney down there. Tell them that you are thinking of buying a condo explain the situation and property in question. They should be able to advise you if its on the up and up. Also they should be able to answer all your questions or concerns with owning property down there. Good luck with it I hope it works out.

 

[the MfM]

Hey OP, I’ve got some ocean front land in Nebraska I’ll sell you real cheap.

 

[mdchachi]

Different place but just a reminder to beware...

https://www.washingtonpost.com/realestate/dreaming-of-a-beachfront-retirement-spot-be-wary-of-nightmare-scams/2018/11/19/b6a2fdb6-ec25-11e8-96d4-0d23f2aaad09_story.html

a slickly marketed development known variously as Sanctuary Belize, Sanctuary Bay and the Reserve. The 14,000-acre project is on the Caribbean coast in Belize, an English-speaking nation bordering Mexico.

Through advertising pitches on Bloomberg News, Fox News and infomercials, developers promised buyers a seductive list of amenities — fine restaurants, a luxury hotel, a world-class marina and shops, a hospital staffed by Americans, a championship golf course, a casino and even an airstrip, according to the FTC. Plus they dangled financial catnip: fat and fast profits if buyers chose to sell their parcels. The promoters pushed on-site tours to people such as the Balluffs, who flew to Belize to inspect the property before putting down any money. But the FTC says “many consumers” bought lots costing $150,000 to $500,000 sight-unseen.

Hardly any homes have been built, according to the FTC, and Balluff says the developers seem “to be doing little more than moving dirt around and making excuses for delays.” When buyers ask for the developers to buy back their lots or they stop making payments, the developers refuse refunds and resell the lots to new buyers, the FTC alleges.

But it gets worse.

 

[112Vulcan]

I have property outside the US but I know nothing about Belize. I would suggest getting a good real estate attorney and talking to the other residents in the condo complex.

 

[mrmeaniemeateaterman]

 

[Julian]

Is there a rental pool process....like a rotation? If not, then his units will always rent first followed by other big owners. I'd be very hesitant on this....

 

[djetok]

So, two years ago on a cruise we stopped at an island for lunch on one of the snorkeling excursions we did, we thought the place was great. Over the last two years, we thought it would be cool to have a vacation home on the island, the island was Caye Caulker Belize.

Now, like anything big I buy, including the boat, I want to make it an asset and not a liability if at all possible. So, with the boat I am starting a rental business that will hopefully cover the cost of ownership and maybe bring income down the road. (Yes I am willing to trade some Dings and scratches for a free boat, or a business that will buy me a boat that is only used by me)

So to my questions. Does anyone have experience owning property out of the country?

What were the risk and troubles you faced?
What advice would you give me?

A little background on the potential property.

I am looking at a condo, the developer is also the property manager and states he is planning to stay around self managing for many years to come.

The offer is between 30-40% down and he will private finance the rest at 3% for up to 12 years.

He said out of the 14 owners currently, there are about 35 units. He is stating that barring them putting restrictions on him of what he can do with the room pricing to keep it full he has been able to get 95% plus occupancy rates. With that, those who let him run it have not made a single mortgage payment or Incured extra cost out of pocket after their initial payment. So basically you are buying the unit at 40% of it’s value and giving him 12 years (or less) to Rent it while your not using it and paying off the property as well as putting money in your pocket each month.

This is a surface explanation. Anyone with experience in owning foreign property, I would love to pick your brain about this and I will give exact numbers.

Thanks in advance for any help.

Just a fyi, I have a friend that his wife bought a beautiful property there. They actually bought the developers personal condo. We went one time, it was awesome for a trip. They ended up putting it up for sale. They said the travel was just too much. They even have a private plane to fly into the property from the airport.

Also it's not like they have jobs. They have plenty of money, like ultra famous musician money. Of course that might be part of it. They are looking at a property that is easier to fly into. I might try a couple of trips first.