USA to ? Bahamas? In case anyone Interested.

Discussion in 'Where to Buy' started by Emma171, 31st Dec, 2014.

  1. Emma171

    Emma171 Member

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    USA to ? 85k rehab Bahamas? In case anyone Interested.

    Not sure anyone will read this but I am posting this here because I was asked questions on another thread. This is about my 85k rehab house on Long Island Bahamas.

    To give a brief background, I have been fairly exclusively investing in the US market for 20+ years (oh good grief I am showing my age) - but mentioned on another thread I actually was applying a theory and long seated desire to work from a laptop in the Caribbean:

    US Economy Crash Theory

    First to be abandoned - holiday homes
    Second to be abandoned - Business and commercial properties
    Last to be abandoned - Homes - single family residences

    Thus the flow of investment opportunities

    First to recover - Homes - this has happened
    Second to recover - Businesses and commercial properties (still happening and bargains still out there but delusional ask prices as consumer confidence increases)
    LAST to recover - holiday homes.

    I thus went after holiday homes:
    I bought Long Island Bahamas... an 80 mile long island that literally only had electricity put in in the 1990's (but Christopher Columbus deemed in 1493 the most beautiful island in the world).

    http://www.bahamas.com/beaches-in-long

    House Size: 1750 sq ft - 3br/2.5 bath, 1 car attached garage.
    Block: 3/4 acre
    Purchase Price: 85k - they had it listed at 160k, then 140k when I offered 80k and was countered at 85K (LOL).
    Rehab - including complete gut and all new furniture, windows, doors, balconies decks, bedding, cutlery etc = $107,500 (we have gone ALL out).. French doors where all windows are..12 french doors to be precise.
    Closing time - worse than a US short sale - took 10 months but I was a 'special case' in theory.
    Rent: $1400 - $1500 a week... absolute peak slightly more. Est. Occupancy 50%
    Return - after cleaning, maintenance and holding costs with 50% occupancy (conservative) = 12%

    Title Type: Torrens Fee Simple
    Ancillary Motivation: Tax free haven
    View: Caribbean sunset to west, Atlantic sunrise to East. House lies at highest point on island.

    You do have to go through a reference system with the Bahamian Investment Board (2 credit references, 2 personal references etc)

    Be aware of title issues - they are rampant so only deal with Bahamian lawyers and estate agents.

    On the plus of this - which is indeed correctly guessed at short term rental, it is an island with zero crime. I wouldn't buy Nassau if you paid me to buy unfortunately due to the crime. I also have, over the years, eliminated every other location almost in the Caribbean either by cost, government or crime. Long Island on my first visit saw my rental car at the airport with the keys in it, I let myself into the open door accommodation and beer was in the fridge... by zero crime, I mean literally zero. Everyone knows everyone - you wouldn't survive on the island without.

    Property itself is in the Stella Maris Resort complex.

    www.stellamarisresort.com/beaching

    Think 1970's outer island Fiji (awful decor) but for the $250 a year that my HOA fees are, I have access to the 3 pools, rock pool, gym, and private beach. This island is predominantly unoccupied which appeals a LOT to the European market that spend vast sums to "escape it all".

    Appeal to Oz investors is that it is a tax free haven (income is tax free)! Real estate tax per annum is literally 1%. Sadly they are literally implementing a 7.5% VAT effective Jan 1 so I just put a 60k Home Depot (Bunnings on Steroids) order in to beat that. Customs and import duties is another thing they hike but with the proximity to the US market prices, HIGHLY affordable investment.

    Bahamas is literally 1 hour from the US (or 90 minutes by boat to the first island) so the feeder market of 300 million people is EXCEEDINGLY tempting. Long Island is a puddle jumper 10 minutes from Georgetown International Airport in Exuma. Or a pleasant 30 minute speed boat journey.

    Will put the questions asked as reply next.
     
    Last edited: 1st Jan, 2015
  2. Lord Shanghai

    Lord Shanghai Banned

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    Good post. Thanks for sharing.
     
  3. Ausprop

    Ausprop Member

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    agreed, this is gold.
     
  4. Emma171

    Emma171 Member

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    Questions asked thus far:

    1) Is the property managed by the resort and are the fees reasonable?

    2) What did you think of the beachside blocks, in terms of medium term cap appreciation?

    3) Are building costs reasonable or extortionate?

    4) Also mentioned - only 43 listings on the MLS

    Reply - pertaining only to Long Island (which is an 80 mile long island with a tiny population of 3,600 odd and me part time):

    Preamble - I divide my properties into lifestyle properties and play properties - my play properties are those I am using purely for investment purposes - my lifestyle properties are like my one in Alaska - rented but where I go and stay. This is definitely a lifestyle property and bought in that vein. I can't afford AUD2 million waterfront in Australia and it would make no sense.. but here, astonishingly at this point, I can afford this. Any property I buy must make $$ while I am not there but I am okay with an "okay" yield. Long Island is dirt road "away from it all" and this must be viewed as such. You have water holding tanks and electricity only (internet is great though!). Think Vanuatu or outer island Fiji 15- 20 years ago? except safe government and fee simple purchase capacity.


    1) Fees: Like many it is an "either/or" - you can be "in the pool" or not. Also, many rent VRBO (Vacation Rental by Owner) or AirBnb etc. they take their own %'s - budget 10% for safety measure on this per booking.

    Cleaning is $150 a change out in tenant for a big clean but you can charge the tenant directly. The resort (or anyone you nominate) can do a check in/check out - I have budgeted a $50 charge per inspection fee to do a checklist for me of items. FASCINATING for prices is to look at the charges on some of the houses at Stella Maris - I just did my maths off this..bottom line - tenant pays. Calculate most staying 7 - 14 days.

    Insurance with a 10% deductible on my property is $2500 a year.

    Property taxes is 1% per annum

    HOA fees mentioned - $250 a year.

    Maintenance will be done by me and be tax deductible in the US so I am budgeting millions a year on that including airfares ;)

    2) Beachside Beachside blocks are an ABSOLUTE no brainer for cap growth but define "medium" cap growth 5 years?? I hate crystal ball projecting and don't do it. I would guess yes as every inch of me was screaming my "buy now" gut feeling and I will probably build next down there but, best to learn with trainer wheels firmly affixed on a rehab first..

    For a "crappy" beach front 3/4 of an acre, budget 85k land only on Caribbean side.. this would be waterfront with a beach contingent on tides. Sunset views from somewhere on it. 2nd tier blocks go for only 30-40k but you have the issue of someone owning your view/access etc. I compromised by being on a hill but I want a foothold and it was just too yummy.

    Zoning is "do whatever you want" in terms of number of units virtually everywhere (CCRs exist in some areas) - what interested me especially - i.e. put one hut, then 2 etc.

    HOWEVER a REALLY interesting point came up when I started investigating?

    Why aren't the Bahamas incredibly built out???? it is stunning (BEYOND stunning) etc?so close to the US etc... here is the fascinating point on the Bahamas? because it is a tax free haven, many many people have bought land simply to have a tax free haven - their address is PO Box Absolutely Nowhere Bahamas?. take that a generation further and all of a sudden, people die and the government has no method of tracking next of kin. It is ironically a serious issue - what to do? Houses go into a state of dereliction and land sits undeveloped. It is a serious issue? it halts development. I looked at the land next to Lenny Kravitz's drummer in Eleuthera (not for the faint hearted or those with vertigo - it is on a cliff but did overlook the sunset which was my first criteria and was under 50k). 2 blocks down and the agent was just "we have no idea who owns it"

    Thus now they have clued in a bit - now you need to consider that anything over 2 acres on Long Island and you need to submit a development plan to the Bahamas Investment Board with a timeline as to what you intend to do with it.

    I saw (well strictly speaking, by "saw" I mean aerial overlay as this is dirt road scenario) an AMAZING block of 5 acres for 150k on a point overlooking sunset that was just "I want"? there are also 23 acres on arguably the most beautiful bay I have personally ever even vaguely seen in Clarence Town (albeit with only 500' of beachfront) for 1 mill - but to say you have a plan you can implement within 2- 5 years??

    4) Building costs? Yes high. I would say you would have to look at $150 - $180 a sq foot including land clearance as a rough yard stick. Why offering on an existing property becomes a no brainer if you can get one. On the plus, they have good builders and the quality is excellent but everything is slow boated in from Fr Lauderdale and customs duties eat you for non building supplies. It may be slightly cheaper Exuma or Eleuthera as they are more developed. I had originally anticipated shipping in a flat pack Balinese Hut on a waterfront 1/2 acre??the 1/2 acre was going to be 50k - absolute waterfront but not beach.

    HOWEVER - you can build a dock into the water (yes, I thought Tahiti style with water bures - completely legal!)

    The more I was down there for land, the more I saw the opportunity to get a foot hold by either buying something Vendor financed (even though everyone says you can't upfront, my agent showed me 4 that were GREAT properties) or a bank foreclosure. Mine is a bank foreclosure. There are people desperate to sell - a whole resort was only 1 mill - it is online at Viviun.com - willing to do a JV for only ?? 75-200k down etc. Why desperate? Again, these people have held out for an economy to recover that has taken a ridiculous time to do so.

    5) Listings ask an agent - there are listings and then there are "I know they are wanting to sell" but I don't want the neighbours to see it online.. What I like/love in fact just love is that you can put in an offer on anything and the worst they can do is reject but the mindset of those down there who are trying to offload a property that needs work is very, very flexible? VERY.

    All houses sold come fully furnished - no one ships stuff back out. I am highly unusual that I don't like 1970's floral cane furniture of Hawaiian t-shirt mindset but if you love that - you would love the furniture that comes with it.

    Bottom line?

    On the remotest off chance someone wants to own a slice of paradise, low ball and work backwards from what you need??

    AGain - mine is an REO - don't think glamour!

    Interesting factoid - they drive on the left - the CORRECT side of the road… they also drive on the left with steering wheels on both sides. Mind spin!
     

    Attached Files:

    Last edited: 31st Dec, 2014
  5. eternit

    eternit Member

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    do you make more money from investing or more money from your buyer's agency?

     
  6. Emma171

    Emma171 Member

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    Lol...I never set up Select for money! The buyers agency was simply to legally offer other investors the opportunity to learn about US investing (still is and why site still up), not to get ripped off by the horrific spruikers who stole peoples money on horrible investments and avail of what was always going to be a feeding frenzy that lasted a very very short period of time that I was willing to take on before it settled. Hopefully also give everyone a base to continue to invest in USA with full knowledge on how to do it and each person able to teach others what to do or not to do. I have made amazing friends who I would JV on though!

    Sorry the absolute no brainer answer on that is investing but I was off the grid since 2008.

    Select for me now is simply that if a great deal comes up then it would be a shame not to share and "get 'er done". .. especially syndicating commercial where it makes no sense to put 100% of your own $ in. What I love best is the hunt.

    In the US you probably need 10 properties to self generate perpetual cash buying or house building. 5 properties and you could live here without ever working. Couple that with a US citizen's capacity for 4-5% fixed interest loans for 30 years and you start realising that the world revolves around how much time you have. You get very selective (why I chose the name). It is something negative gearing just can't afford you but this is FUN. Next year it will be cheaper to build than buy and I will do that etc.
     
    Last edited: 1st Jan, 2015
  7. Emma171

    Emma171 Member

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    Bahamas Update Photos Etc...

    For anyone interested in progress we have been keeping a file.

    The biggest issue to date has been shipping. Fortunately having rehabbed a million properties (poetic license but in the hundreds), being able to count items needed has been the greatest skill that has come to play but it is still a necessity to think through consolidation very carefully and timing (ships being delayed due to weather).

    EVERY item and tool (there is a desperate shortage of tools on outer island but zero crime) must be ordered and shipped down - so count your hurricane ties/beams and 5/8 stainless steel items carefully if doing something like we are - namely adding a deck. Seacor Island Lines do LTC (less than container load) from Fort Lauderdale and get down to the island every week. Home Depot has a central export guy in their FT Lauderdale store thank goodness to liaise but as Seacor's port is Clarence Town (waaaay south) and we are quite far north on the island we try to only have the $450 shuttle once every 2 weeks.

    Labour is $18 for highly skilled, $8 for less plus 7.5% VAT. HOWEVER, a guy quoted $1k for demo - so take a sledgehammer. What I didn't realise is for labour you also pay $12 for travel as petrol is $4.00 a gallon (US is just under $2.00 a gallon). PLUS - rather amusingly, you have to pay for tool hire! We have taken down all our own tools though as I am sure we will end up doing multiple properties down there while they buying is good and you can never have too many concrete saws or dewalt drills, right?

    Here are the photos. If you are interested, keep the dropbox link and you will be able to continue to see the progress

    The White House Long Island Bahamas Progress


    We are only using two guys on this project - the rest will be family and roped in friends for grunt work but we have been fine 1 skilled and 1 unskilled guy for the work.
     
  8. Aaron Sice

    Aaron Sice Seldom Seen Kid

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    loving your updates, Emma - very inspiring.
     
  9. Ausprop

    Ausprop Member

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    agreed, this is very interesting reading
     
  10. Emma171

    Emma171 Member

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    OH - glad someone finding interesting :)

    I think the mantra in real estate should be "if I can do this, anyone can" and if anyone says you are insane? Accept that bit is probably a given in real estate as so few really actually ever DO or even try - if this gives someone a nudge.. glad it did. You need that type of push sometimes if the rest of the planet questions you.

    50 million threads ago and 4 years ago I used to joke about us all being on yachts in the Caribbean moored up with our millions?..

    Every real estate dream starts with research (loads and loads) coupled with not being afraid to actually back your own gut, your own brain and DO it.

    Someone however will definitely read this and save $$ or budget better or get some insight into what to ask about before starting an island project and that will be worth all this!

    Hahahahahaha - this could all end up with me telling everyone about some horrific hurricane story? (At least there is insurance available and I do have a healthy enough building fear to be including triple the required hurricane ties)
     
  11. Gockie

    Gockie Life loving Big 4 Banker

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    Yep, this is inspiring stuff to read. Does require work but wow....
     
  12. Emma171

    Emma171 Member

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    Update for Bahamas before Site Dies...

    As this will be the last on this, I feel an update is necessary to tie this off....

    My 85k Bahamian house with sunrise & sunset views over the water has gone brilliantly. I am in love with it, the island, the people, the life and the water is breathtaking. The Atlantic side is of ilk to Sydney coastline and the Caribbean is a colour that if you haven't seen in person you simply wouldn't believe...

    I am probably over by about 8k on original budget from shipping charges and possibly because of the type of things as - of course you need to get a $100 auto feeder for the wildlife and spend $150 more getting it down here!

    Anyone who even thinks of doing this, should. The property values on Long Island especially are, for now, literally dirt cheap - as in, you couldn't buy land for the price of a full house. It is as cheap as the US ever was and it is a cash buying market. I will net net net be making 8% if I do choose to rent for only 14-15 weeks of the year. Obviously if I rented it out full time it would be a return off the richter scale even calculating in management/holding costs etc but that I believe would be unfeasible?. I actually thought originally the season would die down here in the peak of summer and ran my numbers off a conservative 26 weeks (before I realized I will be here at least 3 months each year for fun) but having now witnessed my first June I can so far say there would be demand all the way through from November at least until mid August. It gets more humid but Long Island is fun.

    If you want the cheapest possible vehicle I kid you not?

    www.japanesevehicles.com check that out.

    It is fitting for me to say that I have read posts where people have asked "when is enough".. ? I am beyond fortunate that I have done what many hope to and that is earn enough through passive income to not "have" to work? or be anywhere in any country at any time.

    Time is what you can never have enough of. So be picky and don't settle. Enjoy your income, enjoy your properties?Bahamas was a long dream and yet this house was also one of the best deals I have ever found - if not the best, by any yardstick - double Fabulous. But that is it?. until the next one!

    Enough is when you wake up every morning thrilled to bits that you exist and doing a project that was the best possible thing you could have done with both your time and your money in a location you feel unbelievably lucky you are in. That is as close to zen as I can get. Doing this house in the Bahamas gives a mission to me being in a heavenly spot?.I have never met more instant friends or been so inspired. The water, the people - incredible. Google Long Island Bahamas - I kid you not, it is amazing and boating distance to more amazing.

    I take a bath in my free standing bath every night with a lovely beverage overlooking the Caribbean sunset.. the wrap around deck is up and the front completely finished. The vinyl floors have turned out fabulously (Papua Ebony floor colour in vinyl planks with white walls). Downstairs is held up by the fact that the deck was extended and thus have 60 million extra planks of trex where the kitchen will go.

    If I didn't have a vast amount of "stuff" on the floors in the way of Ikea boxes I could show more?

    I think I shared the link before for the dropbox folder of photos for those interested.

    Bottom line - "Just Do It"? find an absolute bargain in the part of the world you want to be in? just make sure it is a fabulous investment, do due diligence, run your numbers 43 times as always and go for it.

    If you are thinking though of going offshore, really, really focus on:
    • Political Safety & Systems ergo Commonwealth isn't a bad way to go...
    • Immigration Policies (i.e. are you going to have a refugee camp down the road - a lot of Caribbean islands have a Haitian immigration situation going on)
    • Free Hold - do you own title to your own land
    • Shipping costs
    • Food Costs and delivery
    • Water Supplies and reliability - do you need reverse Osmosis, drinking water issues etc...
    • Internet Availability & Reliability (my internet is faster in Bahamas than Vegas or Alaska as hooked up to the resort)
    • Labour supplies and quality of labour if you aren't savvy enough to do the work yourself or aren't legally allowed to - check rules on whether they would boot you off the island type thing if you even think of picking up a drill. Some of the best tradesmen I have ever seen are on this island - ever, anywhere for $15-$18 an hour? for the deck set out and complicated rough-in carpentry? made hanging sheetrock a dream to have good walls.
    • Tools and tool supplies
    • Getting electricity - even temp, as quickly as possible - are you going to use a back up generator, solar etc in storm scenarios.
    • Are you in a hurricane zone - get shutters

    Hope the photos upload. Please come and visit - I am walking distance from Stella Maris Airport and about a 2 minute walk or under 500 ft from the bar where the Friday night Rum Punch Parties are and the Rake and Scrape band plays - if you leave the windows open on a Friday night, you hear the music wafting in? I am actually 500 ft from 2 bars - there is also the ocean bar and grill and 2 pools? all of which I get to avail of - so please, just visit. Any somersofter is always welcome - just hope you can put Ikea together ;)
     
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