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#518231 - 10/12/16 12:48 PM Investing in Rental Properties (Yearly or Vacation)
AndrewCanuck Offline
Hello All,

I am Andrew from Vancouver BC. Been lurking on these boards for a while now, finally decided to post today.

I am in the process of moving out of Canada and I am considering Ambergris Caye as my future home. I have been fortunate to have made some $$ through my IT and Marketing businesses. I am looking for some low risk / low reward businesses to park my money.

Coming to my questions, I would love to hear from people who have some experience investing in Real Estate in Ambergris Caye, specifically in Vacation or Long Term rentals. I am not looking to invest for Capital Gains, more for Cash Flow so my properties would give me a check every month.

Long Term Rentals:
How is Ambergris Caye for Long Term Rentals, is it fairly easy to find tenants for 1-2-3 bedroom properties?
Any guesstimates on the Rental Yield? How much would a 200k condo fetch in yearly rents?
Are yearly leases a norm, or does it go more like 3 months/6 months?
Is it true that almost 90% of the people on Ambergris are Expats?

Vacation Rentals:
What is the norm for occupancy rates if you were renting by the night or week?
Any guesstimates on how much more or less you would earn in Vacation Rentals compared to Long Term rentals?

Thank you in advance for your inputs and time. Hope to make some friends when I am visiting your beautiful place in March 2017.


#518236 - 10/12/16 02:21 PM Re: Investing in Rental Properties (Yearly or Vacation) [Re: AndrewCanuck]
Diane Campbell Offline
Hi Andrew
You ask good questions. Some don't have answers that are as simple and direct as one might wish or expect.
I'll address the easy stuff .....
Long term rentals seem to be in fairly high demand these days. A year lease is recommended in this case.
We are developing condos right now and some of the completed units are being rented long term while construction is ongoing. They are new units, furnished, have a pool and beach. At present, large one-bedroom units ($200,000 price range) located off beach but with full beach access, are offered for rent at $1,300 per month on a long term basis. Tenant pays electricity.
Anything less than 6 months lease is considered short term for purposes of the Hotel Act. For short term you will need a hotel license, to charge hotel tax etc.
No, 90% of residents on Ambergris Caye are NOT expats. More like 10%.
Occupancy rates nationwide for nightly rentals are often quoted at 45% or thereabouts. This is not that helpful since it reflects occupancy of virtually all nightly properties lumped together. Recommend that you ask rental history and expense log for a property you find interesting and evaluate accordingly. Also review any management contracts in place. Resort and condo properties vary greatly in focus and you need to find the one that works best for you.
I used to own a simple triplex in town. Although it was not a glamorous property, it returned a net of about 5% after expenses, taxes and management company fees. Income would have been 10% higher if I had self-managed, but I had way too much to do to oversee the property.
Be sure to check references on tenants. I've seen good ones and lousy ones .... The good ones are a delight and the others are the reason you may wish to hire property managers!!

#518237 - 10/12/16 03:09 PM Re: Investing in Rental Properties (Yearly or Vacation) [Re: AndrewCanuck]
ragman Offline
Andrew, Diane's post is pretty accurate. Seasonal rentals can be almost a full time job if you want to make good money. Like Diane stated dealing with it yourself is tough. The 5% number she threw out is fair so that would mean that your $200k would only bring in $10k/yr. income. I have known people on the Island you have made 10-15% but again they really had to work at it.

I have rented seasonally on the Island and let the property manager take care of everything. It was fine at the time for my circumstances and it paid all my operating expenses while I still enjoyed the unit during the high months. Do not expect the income to cover a mortgage if you have to have one. In that case it will be a tough row to hoe. Some places, you have no choice and can not rent without using the in place management. I rent several units in the USA but have got completely out of seasonal renting business. All are cash flow positive but here is the thing. You make your money when you buy the unit and if you do not buy at a good price it is very difficult financially. You said you were not interested in Capital Gains but to do well you must be. You have to buy the property at the right price. I have six units right now and everyone of them I either built myself years ago; bought at foreclosure or distressed sale or short sale. Although I've sold many of my units over the years I usually hold them for 10+ years.

I would suggest Reit investments for someone without the knowledge necessary to make this work. However even this type of investment requires a lot of knowledge. Even after the run up over the last year there are many good Reit investments and maybe in the next month or two when (and if) interest rates increase these investments might be better. With Reits you just have to do the research and someone else takes care of everything else. Reits right now pay about 4-10% but they are not all equal and you must do your research. I'm probably more successful with these instruments than with owning the actual property but I've done very well with both.

No matter which way you chose, go slow and read, read, and read. Anything that a real estate broker tells you should be held suspect, especially if they are selling the property. A few weeks ago I signed a purchase sale agreement on a unit which in my opinion is fairly valved at $150k (this is in the USA) I bid $75 and expect to get it for 95-100k. It is a short sale (I hate them) so this may go on for 6 months and amount to nothing but that is the game.

Good luck, everything I said above is based on my opinion and experience (40 years or so). Others may have different experiences or opinions. Another thing is that real estate is cyclical and things beyond your control influence the market.
Somewhere on a beach in Belize

#518242 - 10/12/16 07:33 PM Re: Investing in Rental Properties (Yearly or Vacation) [Re: Diane Campbell]
islandr8 Offline

there is good advice in both the previous posts. I have no idea what the US market or the REIT investments that Jim speaks about entail, but he certainly seems to know what he's talking about.

What I have noticed is that although there does seem to be an increased demand for long term rentals, no one wants to pay for them. Most of the people that are looking for rentals still seem to be under the impression that property is either free or very cheap here, which is far from the case on Ambergris Caye. So although it may be possible to get $1300 a month for a new $200,000 condo in a construction zone, the rent for a new $450,000 condo doesn't seem to be much higher - the rental ceiling from what i see seems to be about $1500 a month - if you're lucky.
There are certainly units available in the preferred range of $500 to $700 a month, but there are lots of people chasing them. The prevailing wisdom given to the endless people dreaming of living the dream in Belize is to rent for a year before making a commitment, which is good advice. Unfortunately many of those people seem to think that the owners of the units should subsidize the rental price so they can become immersed in the culture for the recommended year. As Jim pointed out, there is no way that the rental prices people want to pay can carry a mortgage, if the owner is lucky enough to obtain one.
This is why long term rentals are hard to find ! They are there, but they aren't free.
Meanwhile, vacation rentals are subject to the season, weather, hurricanes, good or bad property managers,etc,as pointed out above.

Edited by islandr8 (10/12/16 07:41 PM)

#518243 - 10/12/16 10:42 PM Re: Investing in Rental Properties (Yearly or Vacation) [Re: AndrewCanuck]
AndrewCanuck Offline
Thank you Diane, Ragman and Islandr8,

You all give me some very valuable inputs. I appreciate you taking the time!

It feels as if the rental business in Ambergris might be a bit trickier than what I am used to in Vancouver. Had a great run with our real estate prices here, almost to the point where I had to just get out of it all, too much - too fast.

Other than tourism, what else contributes to the economy of Ambergris specifically? If 90% of the population are locals, do they mainly work in hospitality? Is there a set minimum wage in Ambergris and Belize in general?

I am sure I will get a lot of these answers once I get out there, but I try to do my homework. Thank you again!

#518244 - 10/12/16 10:43 PM Re: Investing in Rental Properties (Yearly or Vacation) [Re: AndrewCanuck]
AndrewCanuck Offline
One more thing, I hear that there is a 3% tax on rental income. Does that apply to only long term rentals? What type of taxes do the short term vacation rentals attract?


#518245 - 10/13/16 05:18 AM Re: Investing in Rental Properties (Yearly or Vacation) [Re: AndrewCanuck]
ragman Offline
The $1300-1500 for year round tenants is about right and fits with my experience on the Island. These units are not generally rented by locals with some exceptions. The normal worker on the Island couldn't afford anything like that. I know a few Belizean businessmen or professionals who rent annually on the Island but most others are expats in my experience.

Many of the workers who live on the mainland rent lower cost units and live several men to a unit. I wouldn't want to be in that market. My experience is only with middle to upper class units. The workers with families struggle to live to be honest from my experience. Wages are not very much on the Island, especially in comparison to Vancouver. As a matter of fact I think Vancouver is a different world than San Pedro.

I'm not sure on the taxes for short and long term rentals because that was managed for me as part of the deal. I was thinking it was only on short term rentals <6 months. You legally must have a hotel license to rent short term and I don't believe you can get one for a single unit or the expense and hassle is too much. An example of your expenses would be: insurance for unit; your share of insurance for resort; HOA fees; managements share of rental income; repairs; water, electricity and internet/phone. In addition there are fees for VRBO and other advertising if you use these. They are not cheap especially if you want a good position at the site for your property to show.

I don't want to dampen your enthusiasm but it is a tough way to make money for most. For instance, when you get an inquiry for your property you must answer almost immediately or chances are that client is gone. People who are booking seasonal rentals on line won't wait hours for a response, they expect it in minutes. Then you must explain and market to the potential client to get a sell. It really is quite involved. Then there is always the subject of a discount and when to give it and how much. (everyone expects a discount) I was friends with a few people who where quite successful at this on the Island but it really took up all of their time. To be really successful you have to have a network. For instance if someone calls you and has to have a certain week and you are already booked how do you handle that? If you know other people with similar units you sell the week to them for maybe 10% but this takes some maneuvering and knowledge also. With online booking reviews you better not screw up or have someone at the resort screw up or it will hurt you.

Good luck, I have never had to depend on my rental income to live on. It has almost been like a hobby to me. (well not so, I did live on this money for five years on a sabbatical with my family, but if I remember correctly I had 12 or so units at that time and we where living very cheaply, traveling) With $200k you are going to need other income to live on besides any rental income that you can receive from this rather modest amount.
Somewhere on a beach in Belize

#518246 - 10/13/16 05:40 AM Re: Investing in Rental Properties (Yearly or Vacation) [Re: AndrewCanuck]
Diane Campbell Offline
Tax on rental income is 3% regardless of the length of the rental.
Nightly rentals have hotel tax as well, paid by the guest.
As for what people do for a living..... Tourism is our main industry so many people do work in hospitality, but this is a real community with normal needs and businesses as well .... IT, hardware, groceries, hairdressers, clothing stores, cable tv, shippers, doctors, gyms, vehicle repair and many many working in construction.
Your questions are good, but also indicate that you have not visited San Pedro. As always, I recommend visit first and then begin the "research". You will probably discover that you want to explore a totally different set of questions after being here in person.

#518264 - 10/13/16 01:21 PM Re: Investing in Rental Properties (Yearly or Vacation) [Re: AndrewCanuck]
AndrewCanuck Offline
Ragman and Diane, Thanks for your valuable inputs.

Diane, I definitely need to come out to Ambergris, sooner than later.

Ragman, I only have some experience in long term rentals, and none for vacation rentals. I am definitely in for some education. The 200k was an example I was using, I would be looking at the rental business on a larger scale. But again, I need to first be on the ground, learn the ropes on a small scale and then ramp up. Looks like expats in Ambergris are pretty close knit, that gives me some comfort about the process.

Hope to see you in person someday soon. Cheers!

#518269 - 10/13/16 03:59 PM Re: Investing in Rental Properties (Yearly or Vacation) [Re: AndrewCanuck]
Diane Campbell Offline
If you get to know the real estate market pretty well you can make a decent return doing carefully chosen private mortgages. Easier than being a landlord and good security for the loan.

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