Caribbean Real Estate Opportunities Abound

In the past year and a half I have been traveling in the Caribbean looking at and evaluating real estate projects to invest in, and I must say that the opportunities for savvy investors are endless.

My trips have taken me to Cayman Islands, Bahamas, Jamaica, Anguilla, Dominica, Antigua, Barbuda and St. Lucia. I also plan to visit St Croix, St. Kitts and Nevis, Grenada, Barbados and Trinidad in the next few months.

I have looked at all types of properties and development projects comprising of marinas, hotels and resorts, golf courses and residential subdivisions that range from $2M to $1B in value. However, I believe that the current sweet spot for investments are in the $5M to $15M range.

There are a number of reasons why the Caribbean is an attractive place to invest, and these are:

  1. Properties hold their value much better than properties in other parts of the world such as US and Europe. Most of the islands are small (with the exception of Jamaica, Trinidad, Cuba and Dominican Republic) therefore there is only a finite amount of good land available for development
2.  No threats of terrorism. Everybody knows everybody, therefore where is a terrorist going to hide.

3. Stable democratically elected governments. Most islands operate under British common law.

4.  Larger international real estate companies have ignored the smaller investments and projects, preferring to focus on “brand name” investments in the $100M plus range.

5.  Many financial institutions prefer to finance projects that are $10M or even $20M and above. Most projects under $10M are struggling to get financed. Lenders that can offer creative financing solutions that include both debt and equity financing for these smaller projects can make a lot of money.

  1. There are many projects that have stalled because the financial institutions that were once heavily lending in the Caribbean have either gone bankrupt (Lehman Brothers, Icelandic Bank, Clico Investment Bank etc), changed their lending criteria, or they no longer have access to their funding sources that they once had. There are many half built projects that still have purchaser deposits on their books. With much of the initial risk in the deal (permiting, zoning, pre-sales etc) already absorbed and with the property in financial distress, there exists an opportunity to acquire substantial equity at a discount. 
  1. Occupancy levels are down and many hotels and resorts are just breaking even or losing money.  There are numerous reasons for this and some of the reasons are as follows: 
·        Too much debt
·        No marketing budget
·        No websites or poorly designed websites
·       High utility costs and not making use of solar power and/or solar hot water heaters to reduce costs

In many cases some of the properties I have looked at simply need to be recapitalized in order to upgrade to solar power to cut utility costs, refurbish the property, redesign their websites and focus on marketing themselves and local activities properly.

Let me give you an example. I am currently working on acquiring a property that has the following negative features:

Currently in foreclosure and owned by a bank
Some of the rooms need upgrading
Property needs to be completely painted and landscaped
Lousy website
No marketing budget
Low occupancy levels – due to some of the above

Now here are the positive things and why I like this deal:

30 acres of prime beach front land
A fully operating hotel with restaurant facilities
30 fully serviced and approved residential building lots
479 time share owners who are paying annual maintenance fees
$13M of unsold time share inventory
Very good visitor reviews on Trip Advisor
Easy access to North America

Now here is the best part:

It can be acquired, refurbished and recapitalized, which would allow it to restart the time share program, upgrade the website and initiate a proper sales and marketing program for approximately $5.5M

The projected potential profit in 5 years on the whole project would be $12M which would then allow us to have a debt free, sustainable and profitable hotel resort operation.

This is only one example of several that I have like this.

So while others may only see difficulties and the negative side of things, I see opportunity.  I see the opportunity to acquire assets / equity at substantial discount to market value and build a substantial Caribbean real estate portfolio of boutique hotels, luxury rental villas and commercial projects that could have sustainable recurring revenue based on fractional and/or timeshare ownership.

I also see the opportunity to create long term employment and to support the communities that we invest in, and thereby create a win - win environment for everyone involved.

If anyone is interested in partnering with me to take advantage of the Caribbean opportunities at hand please feel free to contact me directly.

Visit my website to see more of the Caribbean projects I am working on.

P.S.  Follow me on Twitter: @BruceRamsey1