Many people living in the tropics like to live on islands as they provide year-round access to sandy beaches, warm oceans and on-the-water activities which represent some of the best aspects of tropical living. In some regions of the tropics like the Caribbean and Pacific Islands, everyone lives on an island, whilst in other countries, offshore islands are prime real estate.
Often people who are thinking of buying an island home don’t realise that there are some real challenges in doing so when compared to buying real estate ‘on the mainland’ – wherever that may be for you. That’s the case whether it is a home for permanent living that they are seeking, or just a holiday home.
The biggest challenge is overcoming the temptation to rush into a deal because you’ve found a place that looks like paradise. A pool villa on a rain-forested hill overlooking a white sandy beach lined with coconut palms may look like the perfect family or retirement home, but there are a lot of factors to consider before rushing to put down a deposit on what at first might seem to be the ‘perfect island home’.
I spent most of my working life in the real estate business and have seen people make a lot of mistakes when buying an island home. These eight tips will hopefully help you to avoid making the same mistakes. Most of them are common-sense. But it’s surprising how often common-sense flies out the window when someone finds a house they fall in love with.
1. Take Your Time
One of the biggest differences between buying a home on an island and one in a mainland urban area is that island homes tend to be on the market a lot longer than urban homes. Of course, there’s always exceptions to that, but generally speaking island homes are a lot harder to sell because the potential market for island homes is only a fraction of the market for urban homes.
That’s because there’s often not a lot of employment opportunities on islands (particularly smaller islands) so the potential buyers tend to be restricted to people already living on the island and retirees, or people who are only buying it as a holiday home or investment property to rent out (more on that point later).
Some island homes are ‘quirky’ or rustic in their designs compared to more traditional urban properties so may not appeal to as many buyers. Therefore, there is no need to rush into a decision to be putting a deposit down. By all means, make a refundable reservation deposit, in return for which the seller should temporarily take it off the market whilst you undertake your legal due diligence on the property, but don’t make any large deposits until you have completed the due diligence.
2. Do Proper Due Diligence
That brings me to my second topic – due diligence – which is really not a ‘tip’ as such but an essential step in buying any property. And it’s even more important to do properly when buying island homes because often properties on islands are not subject to the same level of official checks as urban properties, and there’s a more laidback attitude to making building alterations which in urban areas require certain types of permits depending on the local regulations.
In most countries in which I’ve worked, there is no difference between the construction and building permits required for urban properties and island homes, but because you don’t often see building inspectors roaming offshore islands, things there tend to be ‘out of sight and out of mind’. I’ve even come across sellers trying to market island homes where no building permit was ever issued for the original construction.
Those types of oversights, and problems with titles, can lead to a lot of problems later on if you want to sell to a buyer who conducts more comprehensive legal due diligence. I had a client once who had bought an island home with only minimal due diligence (because he had relied on the assurances of the seller’s real estate agent) and when he came to sell a few years later and the buyer undertook a boundary survey, he discovered his house partly encroached on an unoccupied lot next door.
3. Use Professional Agents
And that in turn brings me to the third topic – the quality of the real estate agent through whom you undertake the transaction. As a former member of the property realty profession, it saddens me to acknowledge there are many unprofessional operators in the business in tropical countries (particularly in those categorised as developing countries). Unfortunately, it is often difficult for buyers to identify those agents who are in that category until they run into problems.
By ‘unprofessional’ I mean those who try to push through sales in order to earn their commissions even when they know there could be problems with land titles or building permits. Sometimes it involves a deliberate withholding of information. Other times it’s simply laziness on the part of the agent before presenting a property to a potential buyer.
Frequently those types of agents will justify the lack of documentation by telling buyers that “here on so-and-so island” mainland regulations don’t apply, but that’s always false. Seek out references for agents that you propose to use, heed recommendations or warnings from trusted friends, or stick with agents who are affiliated with the better-known companies or franchises in the business.
4. Do Thorough Property Checks
As well as legal due diligence on land titles and building permits, you should ensure that you have the budget to engage a structural engineer or an independent licensed builder to check the structure of the building. This is particularly important in areas subject to hurricanes, typhoons, or cyclones. It’s essential that you know in advance whether the building complies with local regulations for ensuring that the roof is properly tied down to the walls and through to the foundations.
Checking the structural integrity of a building in areas subject to tropical storms is something that would be easily overlooked by a newcomer to the tropics as it is unlikely they will have previously experienced storm conditions of the intensity that can occur in tropical countries, and especially on islands that are more exposed to severe wind conditions.
As well as having an engineer look at a property you are interested to buy, you should have a pest control operator check it for termites too. These can be a serious problem in most tropical countries. Even if you have previously lived in a tropical country, you may not be able to recognise termite infestation in a different area because there are hundreds of species of termite in the tropics. You need a professional to assure you that a prospective home is free of termite infestation.
5. Determining a Fair Price
What a property is worth is a subjective judgement because a lot depends on the circumstances and needs of the buyer, but it’s still essential to do some research into what similar properties on your island have sold for to ensure that you are paying a fair price. That’s not as easy to do as it is with properties in urban areas because of the fact that there are fewer sales to make comparisons with.
Keep in mind too that island homes are likely to be at least 20 percent higher than similar houses on the mainland because of the cost of shipping building materials to the island, and sometimes higher labor costs. In addition to that, many island properties have ocean views which will always command an additional premium which can range from anything upwards of another 10 percent.
In many countries there are websites where you can obtain online valuations for properties or see what similar properties in a neighbourhood have sold for, but these sites don’t usually work for island homes because of the smaller number of sales. Therefore, you’ll need to undertake on-the-ground research by asking around about other recent property sales. That can be time-consuming, but it’s worth making the effort.
6. Don’t Buy Property Online
This is another one of those common-sense tips, but it’s surprising the number of people who buy island homes without ever physically seeing them. They rely on photos and videos on a real estate agent’s website, but those don’t always tell the full story. It’s easy for a less than reputable agent to take photos of a home avoiding a squatter community next door or a cement factory down the road. I’ve even heard of fly-by-night agents trying to sell dilapidated properties online using fake photographs.
It’s understandable that some people who are buying an island home as a holiday home might be tempted to buy online, but for anyone looking for a permanent home, it’s essential that you inspect the home in person, and preferably multiple times so that you can see what the locality is like at different times of the day.
Make sure to visit at the hottest time of the day so that you can see whether the house has good flow-through ventilation and is liveable without air-conditioning. That’s the only way to see how good the insulation is in the roof. Unless you are someone who likes to live in air-conditioning, the best island homes should be liveable with fans only. And visit around dusk too so that you can determine whether the locality has a lot of mosquitoes or sand flies.
7. Don’t Buy as an Investment
This advice will probably go against all you have heard from other real estate agents about buying island homes as an investment. Many island agents specialise in selling to buyers who want a holiday home but then have a property agent manage it for the rest of the year and rent it out to holiday-makers.
That may work for condominiums and apartments where maintenance and upkeep is relatively straightforward, but houses require a lot more maintenance – especially if it has a large garden, a swimming pool, a well, and a septic tank. Property agents simply do not do as good a job looking after those compared to condos.
Often real estate agents will calculate investment returns based on unrealistic occupancy rates, especially for islands that experience a long rainy season and have low occupancy rates at that time of the year. So, whilst you may achieve some long-term capital gain when you resell an island home that you’ve lived in for a few years, expecting to receive the same condo-type investment returns for an island holiday home is not realistic.
8. Remember the Rainy Season
My final tip will apply to only a small number of properties, but it’s an important one for those who may be making a purchase in the dry season. Many island properties are located on unmade roads and access to the property may appear to be easy during the dry season, but during the wet season it can be a different situation all together.
Look out for signs of washaways on access roads and whether there are any places where it appears that stormwater may wash over or flood an access road in wet weather. Asking around at neighbouring properties is a worthwhile strategy too. If you have a four-wheel drive vehicle (as many island residents do) that may not be a big problem for you, but if you drive a conventional vehicle, you may find yourself cut-off from civilisation during tropical storms.
Another issue – fortunately with an even smaller number of properties – is that some architects like to design island homes in modules, that is with the bedrooms in separate bungalows to the main house. That gives the property a ‘mini-resort’ feel which enhances the appeal of island living, especially if the modules are laid out around a nice swimming pool or tropical garden.
That can make living on islands that are subject to monsoons or regular tropical storms very difficult during heavy rain as access between the bedrooms and main living area becomes one that can only be accomplished with umbrellas. As anyone who has lived in the tropics for a long time can tell you, umbrellas won’t stop you getting wet in a tropical thunder and lightning storm.
Of course, you can partly overcome that issue by building a covered walkway between the buildings, but that’s only going to add to the cost of purchasing your island home. If you do have to resort to that, make sure your canopy roof is property tied down to the foundations of the walkway otherwise you may lose it all if a hurricane, typhoon, or cyclone strikes.