"Can you buy a condo here that will pay for itself?" is a question I am frequently asked. Here are the questions you need to answer for ME so that I can answer that question for YOU and your unique circumstances:
1. Do you want a beach front condo?
2. How much are you willing to spend (initial capital outlay)?
3. What monthly outgo can you live with for a property here?
4. Will you procure the renters (i.e., thru VRBO or other advertising you do on your own) or will you need a rental manager?
5. How often, and WHEN do you plan to use the condo for yourselves or your family?
6. Are you willing to do any "fix up" or do you want a "turn-key" condo?
A LONG-TERM RENTAL
The long-term market here is fairly good, with rates running around $800 / month for a one bedroom; $1500 - $2000 for a two bedroom; and $2000 - $2800 for a three bedroom.
Of course, if you rent out long term, your personal use here is going to be limited to times between renters - which may or may not be when you want to come. Renting out to long-term tenants is much less headache and hassle - and can be a good way to go if your purpose in investing is to get a place that YOU want to live in several years from now - but want to secure it at TODAY's prices. Visit my Retire in the Virgin Islands web site for information on retirement.
A SHORT-TERM RENTAL
Condos without a sea view and/or pool generally do NOT rent well on the short-term market. The short-term market is pretty seasonal. With good marketing, you can generally rent out your place for 12 - 18 weeks a year - and most of the rentals will occur in the winter months (Dec. - April). So if YOU are planning to "winter" here - then you are going to have limited rentals.
Rates for short-term rentals range from $600 - $1200 a week for a one bedroom; $800 - $2500 a week for a two bedroom; $1500 - $3000 for a three bedroom. Of course, the range in the rates takes into consideration the location and desirability of the condo.
EXPENSES
Condo fees here are very high, ranging from $450 - $1200 A MONTH.
When people ask me if a condo will "pay for itself" - it really does depend on WHICH condo! If your fees are $1200 a month - then you'll be very lucky to break even - and that's NOT considering debt service - just "expenses."
WILL YOU WANT A PROPERTY MANAGER?
There are a number of condos here that have on-site property management and rental agents. These are the most "hassle free" condos to own if you plan to rent your unit out most of the time. I didn't say they were the "cheapest" or "most desirable" - but certainly the easiest.
These include Club St. Croix, Sugar Beach, Mill Harbour, and Colony Cove. Most of these complexes have websites - so google them to see the rates. Their occupancy calendars are typically not up to date - but they do well in season.
Most people who own these units at least break even (not including debt service). Note that some of these condos are self-insured, which means that if you must get a mortgage, the bank will REQUIRE you to have windstorm insurance. That will add another $350 - $500 per month to your monthly fees. Better to pay cash, if you can.
I have wonderful tools at my disposal to help you figure your return on investment. Once I know more about you and what you want, I can run the numbers and give you a really good picture of whether or not owning a condo here would be a good investment decision for you. First, you can Search the St. Croix MLS from my web site.
Then, in order for me to help you, YOU really need to get clear about your plans. Thinking through the questions above will help both of us! See you at the beach?
Kim Lucas, Realtor
340-626-3758
www.retireinthevi.com
www.kimlucasvi.com
kim@coldwellbankervi.com
Kim Lucas, Realtor
340-626-3758
kim@coldwellbankervi.com
www.retireinthevi.com
www.kimlucasvi.com
http://twitter.com/kimlucas/
Facebook: http://tinyurl.com/lphxcc
Hi Kim: I always assume that my clients who ask if an investment property will "pay for itself" mean to include the mortgage payments in the calculation, because, in reality, debt service counts as much o rmore than any other expense, so not including it would result in useless numbers.
In fact, if they pay cash, then they should account for the interest they are NOT getting on that money, since, as an investment, they could put that same money in other vehicles that may or may not perform "better."
What the workd "better" means is of course open for discussion... appreciation on property is a great thing, but if the carrying costs are higher than the income, then even the appreciation has to be weighed against total costs.
Of course, I am sure you already know this stuff...
--> I want a place in Ct Croix... I was wondering if, perhaps, it could pay for itself?
;-)
Kim, Thanks for the post. I currently own some rental properties but none that are outside of my own local area let alone in the islands. This is definitely intriguing however, and maybe something that I'll look into in the future. Mike
thats about how it is everywhere I imagine... They cant pay for themselves unless you get a really good deal or put some money down.. .In Galveston you CAN get a 10% cap on some beach homes which is pretty amazing... and you can break even. I sold a few new homes ( few years old, but never lived in) that will bring in about 10% of the sales price. I think thats a great deal