DON’T Make These
Investing Mistakes
What is a Mistake?
mis•take
(noun) 1. an error in action, calculation, opinion, or judgment caused by poor reasoning, carelessness, insufficient knowledge,etc. 2. a misunderstanding or misconception. When buying real estate in a foreign country (or in any country for that matter) you need to avoid mistakes. Mistakes can be costly. If you purchase any property with an error in calculation, or insufficient knowledge or based on a misunderstanding it can costs you a lot more then just $. Loss of capital, time and stress all come with bad purchases.
Here are my “TOP 3 Mistakes to Avoid” when investing in Belize:
1
Buying cheap land just because its cheap! I hear this all the time from my clients. They come to me and say “But Dennis, I can get a lot more land on the mainland for a lot less money”. My response: “OF COURSE you can, but do you want to live there? What will the land be worth in 5,10 or even 20 years?” I can sell you cheap property all day long and 10 years from now it will still be cheap land. Not always but most of the time when property is cheap its because it’s not very attractive or lacks value in some way. Properties in areas where people actually want to live and vacation always tend to be more expensive. Look at Manhattan, Palm Beach, New Port Beach, etc. Properties that tend to be in isolated areas with little or no infrastructure have a lot less value. So, when looking at real estate “cheap” is not always what you should be looking for. What you should look for are good “deals” in areas that are desirable. These properties make great investments since desirable areas tend to appreciate, grow and develop getting you bigger and bigger ROI. What you should also look for are up and coming areas that have potential. As an example, for many years the east side of Ambergris Caye was where everybody wanted to own beach front property. It made sense since that is where the roads, electricity and other infrastructure is. No one wanted beachfront on the west side due to its isolation and boat only access. This year that has all changed. With the first ever east/west connection road now open dozens of investors are snapping up west side beachfront properties at prices that are 60% less then they are on the east side. LESSON - Buy good deals in great areas and look for the path of progress
2
Buying without using an IBC (International Business Company) If you purchase any property in Belize whether its vacant land, a beach front condo or a million dollar estate your goal in doing so should be to think about how this property will eventually make you or your family some good ROI. Even if financial return isn’t your main reason for purchasing it will save you and your loved ones thousands of dollars to set up your ownership of your properties taking advantage of a dual IBC ownership structure This has several advantages: • Protection from lawsuits • Privacy • Tax Minimization • Asset Protection • Simplicity of Ownership It takes less then 24 hours to set up your International Business Company and costs only $950 U.S. We recommend using Capital Corporate Services with their office located on Front Street in Down Town San Pedro to handle all of our clients needs when it comes to setting up their IBC’s, title searches and closings and helping with their offshore accounts. If you don’t do this you will pay thousands more in taxes and open yourself up to risks where you could loose your property all together. LESSON - Take advantage of IBC’s to maximize your ROI and protect your assets
3
Selling for profit without taking advantage of owner carry financing What is a Investing?
in•vest
(verb) 1. to put (money) to use, by purchase or expenditure, in something offering potential profitable returns, as interest, income, or appreciation in value.
An investor wants to maximize their return. Usually there is the thought of “by low, sell high”. However the local banks in Belize have made it easy for sellers to squeeze several more percentage points of return from their investment property. How so? Local banks require 40% down on all property loans and charge 10.5-11% interest. This limits the numbers of buyers who can purchase in Belize since many don’t have the 40% down in capital available. The seller of a property can use this to his advantage. For example, say you purchased a property for $200k and now its worth $300k so you decide to sell it and cash out. Using simple math your ROI would be $100k. That’s a pretty good return! However, what will you do with that $100k when you get it into your hands?
Unless you really need to purchase something else with it you’ll probably just reinvest it somewhere. If that is the case why not just offer to sell your property to a qualified buyer who needs financing. You may ask for 10% or 20% down, charge 10% interest and give them a 5-15 year am. If you need to cash out sooner then put in a 2-3 year balloon. The effect of doing this on your ROI is incredible. You are getting 10% on your money pretty much risk free since the property stays in your name until the buyer pays in full. If at any time the buyer defaults the seller keeps the down payment plus all of the money or quarterly payments that were made. LESSON - Maximize your “Profitable Returns” by offering Owner Carry Financing
For lots more info and to learn about investment opportunities in Belize, contact:
DENNIS J. KAY II
Office (011)-501-226-4400 Cell (011)-501-632-6398
www.BelizeIslandsRealEstate.com
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