Sunday, September 23, 2012

Getting a Great Return on Investment on Ambergris Caye...how it can be done, The Answer At Last!


OK, you’ve been very patient. Here’s how you can make a great short-term return on investment which is ALMOST 100% guaranteed to work: Buy a piece of land at THE RIGHT PRICE. Built a small and totally charming house on it and sell the package for a nice profit. Sounds too easy? It isn't but it's also not that hard and it's within the reach of any serious small real estate investor. Read on!


1. Everyone knows that real estate is all about Location, Location and yet more Location. Ambergris Caye is a pretty good geographical location but some parts of our island are better than others. Pick a great residential location on the island as this plan is residential in nature. In this case I will select the Tres Cocos area of the island, generally reckoned to be one of the finest residential subdivisions on Isla Bonita. (There are other great residential areas too…Holiday Lands, San Pablo Canals, Boca Ciega). All have great locations, they’re all close enough to town for easy access but all peaceful areas too…do not make the mistake of buying cheap land too far from town).

2. Again, we’re using Tres Cocos for this example. Look for a building parcel which is being offered at a great price. By “great price” I mean $55,000US or less. It doesn’t have to be beachfront (well, it can’t be at that price!) but it DOES have to be visible to passing traffic and would ideally be located on the main road which passes through Tres Cocos.

3. Found the property? Buy it! Pay cash, get the title in your name.

4. While all of this has been going on you’ve also worked on some great plans for a small and very charming and simple little island house. 2 bedrooms, 2 bathrooms, 850 square feet under roof, nice little covered veranda of about 120 square feet. There are one or two great guys on Ambergris Caye who can draw superb plans at very reasonable rates. Expect to pay no more than $3000US for a full set of great building plans along with planning permission from the Ambergris Caye Planning Committee assured.

5. Find a great contractor. We know a few, it won’t be hard for you to find them. They’ll build your house for about $70US per square foot. included in that figure is the caveat that you’ll be buying most of the finishing materials yourself in order to get good discounts from suppliers. To get this rate you have to avoid expensive luxury finishing materials for the kitchen and bathrooms. Instead of granite and marble, for example, you’ll be using something like hand painted Mexican Talavera tiles and basins for the bathrooms. It’s really beautiful stuff but also quite inexpensive in price.

6. This part is very important. The exterior of the house must be utterly charming with tons of “curb appeal” when it’s finished. I would suggest a Mexican style exterior, arches, curves, a rough stucco concrete finish and a colourful, bright paint finish. You want people driving by to stop and take notice.

7. So, let’s add this all up. You bought the land for $55,000US or less. Built the house for $70,000US including plans. That’s an investment of $125,000US. Sell it for $199,000US or thereabouts. Even after paying a real estate commission and covering some unforeseen costs you still get a return on investment of about 40%.  How many homes are there in Tres Cocos for sale for under $250,000US? And, if there are any, how many are actually worth the money? Your house would sell like the proverbial hot cake because it would be utterly charming, right?

8. There’s actually a way you could greatly increase your percentage return on investment if you can qualify for a bank loan. Buy the land for cash, borrow the money from a local bank for the construction. If you can get the house built and sold within 18 months here’s how the profit would stack up. You’ve paid $55,000US for the land, $3000US for the loan setup fees and about $11,000US in interest assuming you use the whole 18 months before selling. That’s an investment of $69,000US for a profit of $45,000US, about 66%.

9. Now some of you are going to ask me “If this is such a sure thing, how come you’re not doing it yourself.” Two answers to that question: (a) I’m already pretty busy and (b) I’m thinking about it.

10. So, what can possibly go wrong here? Well, we are in the Hurricane Zone……..an obvious calculation that everyone investing in the Caribbean takes. Hurricanes have visited before, it could happen again, one day it probably will. But, chances are good that you’ll avoid disaster during the relatively short period of this little investment project. And, if you do suffer a storm related setback the chances are good that it’ll just cause a delay rather than end the project.

Email me at info@pelicanproperties.com if you have any questions!

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