Get more return from your 2nd home on Curacao

2 juli 2018
2e woning op Curacao als belegging

Return on your second home on Curacao

The return on your 2nd home is much higher than the return on your savings!

The interest on your savings falls or in some cases is nothing at all, so saving is no longer attractive. Many savers are looking for a safe and profitable investment and choose to purchase a second home on Curacao and then offer it for rental.
Purchasing a 2nd home on Curacao or Aruba provides more security and yields a higher return. The risk of vacancy is very limited. In the Caribbean there is a large shortage of social and private rental housing, due to the large number of expats and interns on the islands. If you want to enjoy your investment in addition to return, you can choose to purchase a holiday home, if you do not use your home yourself, you can easily rent it out via Airbnb, booking.com and many other online platforms. On Curacao and Aruba there are several Management and Rental organizations that can assist you during the stay of your guests or even take over the entire Rental and Management process.
For many individuals, renting a house is often the only option. For investors, this is a great opportunity for return because the mortgage interest in the Caribbean is on average 6%, investors benefit from very high rents.
Thanks in part to smart purchasing, a rising housing market and renting out under attractive conditions, you can safely invest at a return of up to 14%. This does not include the profit on sale.

Calculation example buying with your own money:

You buy a second home for € 200,000 and rent it out for € 1,500 per month. Then your gross annual return is € 18,000 / € 200,000 = 9%.

Calculation example buying with loan capital:

Because financing through a Dutch bank is quite difficult, most investors opt for a local bank on Curacao. With an own contribution of 50%, most banks charge 6% interest with a repayment period of 15 years.
The purchase price of the second home is € 200,000. Own contribution €100,000, loan capital via bank €100,000. You rented out the house for € 1,500. The rental income will then still amount to
€ 18,000 – 6,000 interest, loan capital is € 12,000. That is a 12% return on your invested equity!
As an investor, you want to keep financial risks to a minimum. Buying a second home for rent is a safe investment with limited risks. The biggest risks you run are vacancy, rent arrears, damage and lease termination. You can minimize these risks by renting out your furnished second home or apartment to expats. Expats are often looking for temporary housing and are given a budget by the employer, who in some cases even pays the rent in full. The advantage of this is that you have more certainty with regard to the rent payment. In addition, your second home or apartment is not permanently occupied, which considerably reduces the risk of damage. Renting out your home furnished will increase rental income, but keep in mind the depreciation of furniture and other items.
You can contract damage and repairs. Be sure to be assisted by a local partner on Curacao who knows the pitfalls on the islands like no other. For you, this means that you reduce the risks and get more return from your investment.
Buying a second home on Curacao for rental is a safe investment. Because you have the security of possession, and can always sell the house with added value, you run few risks. As an investor, you benefit from the high rents and increasing demand for housing. Buying and renting a house is not something you do every day. When buying and renting out a second home or apartment on Curacao, many things are involved that you as an investor may not have time for or know about.
As a (rental) broker, Sun Life Real Estate helps you with: offering your home to expats, calculating the maximum rental price, thoroughly screening and selecting the candidates, organizing the viewings and drawing up the legally tested contract. If desired, we take care of managing your second home or apartment on Curacao. The advantage of this is that you don’t have to worry about it yourself, and the letting of your second home proceeds according to laws and regulations. The result: maximum return on your investment.

SunLife Real Estate = Professional » Fast » Reliable » Personal

Due to our years of experience in renting out living space on Curacao and a large network of expats, properties offered through Sunlife Real Estate are usually rented out within 2 weeks. Benefit from our local market knowledge and list your property today. Contact us for tailor-made advice without obligation. Our rental and sales agents are ready for you.

 

This article was written by Adriaan Smit, real estate agent on Curacao

If you would like more information about this article or any of our other services, please contact me at adriaan@sunlife.realty

You can visit our Facebook and Instagram pages to have a look at our latest listings.

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