Become an Investor in Real Estate in Cayman! Do you want to buy a second property in Cayman and rent it out for an income? Have your tenants pay your down your mortgage? Sound like a superb idea there is nothing cleverer than building your wealth by investing in bricks and mortar, start early to grow your real estate portfolio.
How do you start? Educate yourself about the market, search out a full time CIREBA trained Agent at Engel & Volkers that you like working with and that know you are looking for a solid investment. Start saving up your down payment, you will need at least 30% down if it is your second home. Some things to think about are, location, where is the best area to buy in for the rental market? One great area is West Bay as this is currently a hot rental market for people on long term work permits and it takes one 15 mins to get into town from here. OR do you want to buy a condo on Seven Mile Beach to put in the Short term rental program. Condos provide the best ROI for the landlord as opposed to house rental. Locations such as Seven Mile Beach area, (ie not beachfront) is a prime area because work permit holders prefer this area when they are on 2 or 3 year work contracts. If they are only here for 2 or 3 years, it sometimes does not make financial sense for them to buy property. This area is in the heart of the action, restaurants, nightclub, groceries, and bus routes and of course the beach.
Buy, fix and flip: You have to know your own threshold for risk when investing. You can make big money quickly but it usually takes a lot work and risk, such as buy, fix and flip, like so many of the popular HGTV shows amazing how a home is transformed all in the span of 30 minutes! However, in Cayman it is not as easy as it appears, anything that needs updating usually needs a lot of work, which cost a lot of money for supplies and labor, unless you DIY, there is 7.5% stamp duty needs to be paid to the government when you buy the property, realtor fees between 5-7% of the sale price and the time on market is normally 3-6 months are just some factors you need to consider. The Fix and Flip method has too many variables and the profit margins can be skinny - one bump in the path and you can see you profit disappear. The good thing is at least you still have the property that will appreciate long term.
Pre-construction condos: Another good option is pre-construction condos, this can be risky if you buy from a bad developer, make sure you research the developer and see his track record. We only have a handful of developers on island and make sure they are a part of the new Cayman Contractors Association. Check out the list at CCA There is no oversupply of condos so you will make money over time, usually.
Buy, Hold, Rent: The best and safest way is to buy hold and rent out. Most successful real estate investors know that their wealth will come from long term holds. Even the Real Estate Agents in Cayman cannot foresee and time the every changing market perfectly. Buy plus Hold plus rent equals the safest strategy and provides some of the best returns. In Cayman, we do not have onerous landlord and tenant registration. Normally, we have good tenants, once in a while we have a bad tenant but there are ways to deal with that legally that is relatively easy and quick. It is good to have a local property manager such as Engel & Völkers to do the rental management of your property. We charge 10% of the monthly rent but if the tenant does not pay their rent by the 3rd of the month, we are on their case making sure there is no issues with rent.
Buy, Renovate, and Hold then Rent:
Renovate is the optimum word here, not a major overhaul just a tidy up. If you have ever looked for a rental yourself in Cayman, you will see the wisdom in replacing the wicker sofa with a modern comfortable sofa and in painting the walls a modern grey instead of a sea foam green. Why not donate the large tube TV and replace it with a wall mounted flat screen? While you are at it ditch the large TV armoire for a modern sleek look and replace that 10 year old mattress! Listen to your Engle & Volkers Rental agent and Advisors, we know the market and we also know what our customers are looking for. Let’s just say Engel & Volkers Cayman Islands have the pulse on the market in Cayman. The little touch ups that do not cost thousands will go a long way in gaining that extra $100 or even $300 more a month rental income. Also a clean and well taken care of property will attract a better type of tenant who will respect your property and will most likely stay longer.
Heidi Kiss, Broker, License Partner and Advisor