September 29th, 2009
I’ve always hated when salesmen ask me what my budget is, it feels like a set up. But heck, everyone has a budget. There are so many things to consider beyond the price of the island itself; you also must consider the development and maintenance costs. Do you want to spend your entire budget on the best possible island? Or does your budget need to include the cost of improvements?
The need for fill, power generation, production of potable water and disposal of waste are just a few of the things you need to consider. Even if you don’t plan to develop the island immediately, these are important questions to consider upfront ensuring you’ve budgeted appropriately. You also need to consider the maintenance costs once this infrastructure is in place.
Most Belizean islands require at least some filling to raise the elevation to an even height. Filling an island can be completed in various ways. Each technique has its pros and cons and the ideal method will vary depending on the island, the budget, and the long term goals of the project.
A coral island may cost double that of others but overall it could save considerable money on construction costs. Why? Less filling is necessary and also the building footings need not be as deep.
Power generation can be handled in numerous ways. Diesel generators are the most common and cheapest method. But long term the cost of maintenance and fuel is very expensive. Solar has a much higher up-front cost but virtually no long term expense. Overall, the best approach is a combination of solar with a diesel generator as a back up. This allows you to get your development going immediately using the generator while you properly design and build the solar system.
The creation of potable water is probably the easiest and cheapest challenge to tackle. A simple structure with a roof and rain gutters that direct the water into a cistern will begin producing free fresh water immediately. The important part is to create plenty of storage. From there a simple filtration and pressure system will get you going. For the long term a purification system or a reverse osmosis desalination system would be important additions.
Once the basic infrastructure is in place, then the building process can begin. Construction costs on an island can run up to 50% more than a mainland property. Delivering building materials to an island can easily eat up thousands of dollars per trip so proper planning to maximize the use of the vessel on each delivery can make a big difference.
I wish we could spell out the cost of each facet of island development but each vision will have a need and therefore a different cost associated with it. The important thing here is to begin thinking about these aspects right up front because your development costs could easily surpass the purchase price of your island.
So when you’re asked the dreaded “what’s your budget” question, remember it’s necessary to consider not only the cost of the property, but also the funds necessary to make it livable.
Categories: General
August 8th, 2009
We’ve had several discussions with seasoned real estate investors who feel that “CASH is King” and that if they time their purchase right, they can pick up some real bargains. They rightly feel they have an advantage by using their cash to negotiate a great deal on a stunning piece of real estate. And islands are subject to the same market fluctuations as any other piece of real estate right? Although that’s usually the case, often times it’s a challenge to get the owner to acknowledge this!
Here’s why;
One of the biggest misconceptions we come across is that islands are all owned by rich people. This just isn’t the case. In fact a good percentage of our island listings are owned by very simple people. More than once, we’ve sat in the home of a fisherman that couldn’t read and their accommodations are little more than one room shacks. Their homes exhibit the most basic elements of shelter. Yet these people own islands! How is that?
For generations, fishermen have used islands as fishing camps. There was never a concern about who owned the land because they were just using it. When the fishing conditions required they move, they would just pick up their camp and move to a new island. Some of them, however, stayed in one location for years. Eventually the locals would just associate a particular island with the fisherman staying on it. So an unnamed island, for example, eventually became known as “Wilfred’s Caye”. Eventually the fisherman realized the value in formalizing his “ownership” of the island. Not because of a perceived value or exclusivity but simply to retain a legal hold on their fishing camp. Provided they had followed a specific set of rules, they could apply to the government for ownership of the island.
Fishermen of course play an important role in most societies and as a group they can have considerable clout in government. When fishing cooperatives were formed, these fishermen picked up substantial amounts of the off-shore land. Primarily because no one else had any desire or use for it. Islands were never thought of as glamorous or exclusive. They weren’t even considered an investment; they were just a place to stay and a way to protect their fishing territory.
As years go by, the island is passed down through the generations. It wasn’t until fairly recently that the lowly fisherman hears stories of some other fisherman who sold his island for a million dollars. Naturally, they feel their island MUST be worth at least that much or more. They don’t take into consideration all of the typical ingredients that make up real estate value. If someone else got a million bucks, then they should get more!
One happy day we arrive in the home of this fisherman and agree to help him sell his island. We attempt to explain the various factors that make up the value of his property. But none of our experience or advice matters. These individuals have virtually no understanding of money. All they know is they want a million dollars! Forget the fact that the property is only really worth about $200,000 (which would make them “rich” by local standards); our advice usually falls on deaf ears.
In certain situations, we won’t even accept the listing. It’s just not worth our time. In other instances, we’ll take the listing knowing full well that it will take a while before the owner comes to his senses.
Eventually our savvy investor shows up with cash. Knowing the condition of the world economy and that many investors need to cash out quickly, they assume the real estate market has also affected this fisherman. The problem is, in the fisherman’s mind, it hasn’t affected him at all. He doesn’t tie his life’s hardships to the value of his property. He doesn’t even see the connection. So, trying to convince him his land is worth less than it was last year because people are buying fewer fish is usually futile.
The example above is used to demonstrate that timing an island purchase isn’t quite as critical as your typical real estate investment. Are there desperate foreign island investors that need to liquidate? Of course; but they are fairly rare. The very thing that makes an island special also makes it less liquid than traditional real estate and most investors know this going in. Also, keep in mind, for most investors the island was more than a simple real estate investment. It was more a lifestyle investment and the fulfillment of a life-long dream. So, when times get tough, the island is probably the last property they want to sell.
So although it makes perfect sense to strategize the timing of your “normal” real estate investments; islands don’t necessarily fit this approach.
Categories: Uncategorized
June 10th, 2009
Selecting the right island for your vision is critical. It’s so much more than just selecting the prettiest island within your budget. The size, location, shape, water quality, existing vegetation and ease of development all play into the suitability of the island.
Your vision and overall budget will dictate the suitability of the island. Does the island need filling? If so, what is the availability of sand? How many structures will be on the island? Will all of the envisioned structures fit on the island? Will the island be used for commercial or private purposes? Are there governmental restrictions on the development plan of a particular island or general location?
Ironically, very few buyers end up buying the island they were initially focusing on. More often than not, once they see the property in person, they find that there are other islands more suitable for their project.
When all aspects of development are considered, sometimes it makes sense to look at a higher priced island. Since the ease of development can save a tremendous amount of time and expense over the life of the project.
In the end, the purchase price of the island is just one small part of the entire overall equation. This is why it’s important that we discuss your plans for the island in detail. With this information, we can recommend the most suitable property for your needs.
Our next installment will cover the Timing, Budget, and Return on Investment and over the next several weeks, all the topics below.
- Timing and budget and return on investment.
- Obtaining permits
- Filling methods; what is sand?
- Dredging
- Drag Line
- Small scale dredge and trash pumps
- Hand filling
- Excavating the island’s own material
- Barging in sand
- Rocks, tubes, and other natural sand gatherers
- Landscaping
- Sea walls
The previous installment talked about your island vision. Read this post by clicking HERE.
Categories: General
March 12th, 2009
Soaring palm trees, perfect white sand beaches surrounded by clear blue water loaded with coral and an abundance of wildlife. This vision, however, is sometimes outside the budget. But don’t let that stop you; we can help!
Our first contact with island shoppers is always exciting. Within a few conversations we usually find ourselves fully immersed in the client’s vision of their ideal island environment. It’s so cool!
The plans range from a personal estate to a mega resort system involving several islands. Oh, and we can’t forget the people wanting to start their own countries! Brilliant ideas like “Stonerland” or “Make-love-not-war-topia”. Uh, yeah… give it up. The point is, everyone’s idea is so personal that it’s impossible to make blanket statements about which island is best. It’s just not that simple.
It’s during this stage that we get some important information. The initial questions we ask are easy: Why do you want to buy an island? Where are you looking? What do you intend to do with it? What’s your budget?
The answers to these initial questions will narrow down the search considerably. From there we can get down to the real details. How far from the mainland? How often will you be there? What features of an island are most important to you? Snorkeling? Easy access to the mainland? Close to the cruise ships? Total isolation? Etc…
There are no wrong answers to these questions and most people have some very specific features they feel are most important. While one client might think an island must be isolated to be truly exclusive and private, the next will feel comfort in having neighbors nearby for those times when they need to borrow a cup of sugar!
We’ve found that very few people end up buying the island they originally focused on when their search began. The reason is simple, yet difficult to grasp until you are there on site; the most beautiful island today may not be the right island for the project. Once all aspects of development are carefully considered, it may be better to start with an island you had previously eliminated.
Some aspects of an island you simply can’t change; like its proximity to a particular reef or mainland town or the quality of snorkeling just off shore. But the land itself can always be improved. The degree of change is just a question of budget and time frame.
Often times an island in need of filling and landscaping can be a much better long-term investment, than just buying the prettiest island today. So we’ll always try to help you focus on the vision of the project and then match the island to this vision.
Our next installment will cover the suitability of the island and over the next several weeks, all the topics below.
- Suitability of the island. Can it support the project?
- Timing and budget and return on investment.
- Obtaining permits
- Filling methods; what is sand?
- Dredging
- Drag Line
- Small scale dredge and trash pumps
- Hand filling
- Excavating the island’s own material
- Barging in sand
- Rocks, tubes, and other natural sand gatherers
- Landscaping
- Sea walls
Categories: island development
March 8th, 2009
Nearly every island we have listed needs at least a small amount of filling. As a result, filling an island with sand to raise its elevation is one of our most frequent topics of conversation with our clients. Even the higher elevation islands can benefit from filling to aid in proper drainage and discourage the ponding of rainwater.
To cover all the details, I’ll need to do this in several postings. I’ll insert a link in each post so if the subject interests you, you will easily find the other postings on the subject.
Filling an island can be completed in various ways. Each technique has its pro and cons so the ideal method will vary depending on the island, the budget, timeframe, and the long term goals of the project.
If an island is located in an environmentally sensitive area such as a marine reserve, then this must also be taken into account. On some occasions, this means the sea floor must not be disturbed at all.
We’ve met lots of island owners and potential island owners. I have yet to meet one that doesn’t love the environment surrounding a tropical island. Each and every one of them wants to accomplish their goals with the lightest footprint possible on the surrounding environment both above and below the water. With some planning, an effective approach to filling will be found for each situation.
With this in mind, I’ll discuss several critical stages of the filling process and the different approaches available to the island owner.
The topics will be:
- Your island vision.
- Suitability of the island. Can it support the project?
- Timing and budget and return on investment.
- Obtaining permits
- Filling methods; what is sand?
- Dredging
- Drag Line
- Small scale dredge and trash pumps
- Hand filling
- Excavating the island’s own material
- Barging in sand
- Rocks, tubes, and other natural sand gatherers
- Landscaping
- Sea walls
As you can see there is far too much detail to put this into one post. I’ll cover each topic as time permits so please check back often or subscribe to the RSS feed to receive the next post as it’s uploaded!
Categories: island development
