You’ve found the perfect place to own a vacation home. It has the weather you want, a convenient location, and the ideal lifestyle for you and your family.
Now all you have to do is decide on a home.
Condos, cottages, bungalows, villas, custom homes…
There are so many options on the market, it can be tough to decide which one is right for you.
We recommend approaching this process by analyzing potential homes through several filters — from a financial view, a practicality view, a dream-big view, and a revenue-generation view.
What’s your budget?
First things first, what are you willing to spend on a vacation home?
Since buying international real estate is different from buying domestic real estate, you should consider that you will most likely have to pay for the entire home in cash or you will have to make a substantial down payment, such as 50% of the total home cost.
It’s much trickier to get traditional financing for foreign real estate. Also, developers carry significantly more risk when they offer financing programs, which is why they usually require larger down payments.
However, the good news is that your money tends to go a lot further in foreign countries where you can get high-quality, beachfront real estate for the price of living in the suburbs in a medium-sized city in the U.S.
Figure out a realistic cash budget and a timeline to get liquid first, that way you are prepared to jump on any opportunities that come up when you start your search for a vacation home.
What do you want or need from your vacation home?
Next, you should consider your personal needs. You want to make sure your home is practical for your specific needs, otherwise, you won’t end up using it as much as you anticipate.
We know from experience that most people purchase an offshore property with the primary intention to enjoy the home with family and friends. Or, maybe as a place to retire. The investment performance is normally a secondary concern.
How many bedrooms do you need? Is there room for your family and a few guests (if you plan on hosting other people)?
Does it offer the type of design you desire? For example, we like to include big patios and open floorplans that create an expansive indoor/outdoor living space so people can take in the weather and scenery of our beachfront locations.
Does it come with a view? Some people have to have an ocean view — others are happy with jungle views and a little extra privacy.
How close is the home to the amenities that matter to you? Do you have any deal-breakers?
Ultimately, you might have to compromise a little bit if you and your spouse have vastly different preferences, but you will be surprised what kind of home you can find if you keep an open mind.
Do you want a return on your home investment?
We find that most people don’t view their home as a financial investment, but more of an investment in the lifestyle their family enjoys. However, most people also don’t mind generating enough revenue to at least offset the cost of owning their vacation home.
In regards to investment performance, we recommend that you talk to the people at the property you are considering to get the performance statistics of their rental program. And, if they don’t have a rental program, then we don’t recommend acquiring one of their homes — assuming that generating revenue from your vacation home is a concern of yours in the first place.
Why? Effectively managing a vacation rental from afar is a monumental task that causes unnecessary frustration and often loses money.
We recommend looking for data that might point to one product-type outperforming the other products. For example, if you have found two different homes at one property that you would be happy to own, you could let the rental income sway your decision to one or the other.
However, we don’t recommend making it the most significant factor in your decision-making process.
We see time and time again that people are most fulfilled by their vacation home investment when they are there creating memories with their loved ones. In fact, many of our Orchid Bay investors choose to live in Belize full-time, despite the fact that their homes are in high rental demand.
There is no one-size-fits-all solution
While there are plenty of considerations to make when looking for a home to buy, there really is no one-size-fits-all solution to the question of what’s the best property for you.
Each project will have different product-offerings. On the residential resort projects that we own and manage, we always strive to have an array of different product-type, sizes, and amenities, so that almost any buyer can find what they are looking for at our project.
Ultimately, you have to look to the future and think through all of the ways that you will use the property, couple that with the size that is comfortable for you, look to see if the cost-premium connected to the different locations and views make sense to you, and lastly, sprinkle in the projected rental performance…and choose!
Finally, we recommend that you speak to those that have gone before you and learn from them. When prospective buyers come to look at any of our properties, we have mixers and open houses with current residents so that the buyers get a chance to hear from those that have already walked the path that they are considering walking.
By Chris Williams
CEO of Legacy Global Development, an international real estate development company with properties in Costa Rica, Belize, and The Bahamas.