Investing on Curacao

1 augustus 2019

How to start investing in real estate in Curacao?

Investing in real estate is exciting and it can also be very lucrative. However, it is not only putting the money on the table, it will also take a lot of your time. You can of course outsource various tasks, but this will eventually lower the return. However, depending on what you want and what you can do, outsourcing can be a smart idea, especially because of the taxes (more about this later) Firtly, an overview of the basics in real estate investing on Curacao.

What is your goal and how are you going to get there?

Before you start, you must first ask yourself why you want to invest in real estate on Curacao. Are you doing it for the monthly cash flow? Perhaps you are more interested in flipping (buying, refurbishing and selling) real estate? Or do you see it as a pension provision and do you want to own (a) paid-off property (s) later on in order to be able to sell it for a living? Many different real estate strategies are possible, each with their own advantages and disadvantages.

Cash flow

Imagine you would like real estate for the cash flow (you therefore have a monthly flow of money). Then the question is what kind of real estate? Are you going for housing? Or just commercial / industrial real estate on Curacao?

Investing in real estate on Curacao with small amounts

Maybe you want to invest in real estate with small amounts. Or do you want the benefits but not the burdens of real estate? Then it may be more convenient to invest indirectly in real estate via a crowdfunding site or private loan.

Real estate on Curacao for rental

However, the way that appeals to most people (and where most questions come to me) is renting out real estate, specifically the rental of living space on Curacao. This is what we will look at further in the next few sections.

Research points prior to investing in real estate on Curacao

So you have just decided to invest in an apartment or house on Curacao for the rental. What do you have to figure out? Here are things you should definitely look at:

  • What is the normal asking price in the area where you want to buy (price per m2 living space)?
  • What is available in the market and where is the demand for rental?
  • What are the rental prices in that area?
  • What costs will you incur? Think of VvE, property tax, insurance (eg Legal assistance, building burglary), regular and major maintenance, etc.
  • What is the maximum mortgage / loan I can get (often 70% of the market value in a rented state, which is lower than the market value in an unlet state)?
  • What are the usual interest rates that you pay for this on Curacao (hint, about 5% depending on conditions, term and bank
  • What are the costs for property management? If you already have a job, you probably want to outsource everything.

If you can answer the above questions globally, you are well on your way. However, it may take a while before you have a good idea of your specific part of the real estate market on Curacao.

View a property

If you have ever bought a home for yourself, you have probably looked a lot at living comfort. Do not do this for a property that you want to rent out! You have to look very differently for a property for rental. You have to look from a return point of view and from the tenant (s). Make an appointment with a broker and ask yourself the following:

  • What is the risk of vacancy?
  • How much maintenance is to come for the property (so also check the VVE documents if applicable)?
  • What may need to be replaced immediately before you can start renting out?
  • How good is the neighborhood, and which way is it going (developments in the neighborhood)?
    How is parking in the neighborhood, nightlife, public transport, etc. (location is very important). In short, what is the location like and what kind of tenants does that appeal to?
  • Is it useful to make a number of adjustments that improve rentability? Can you create added value by adding a bedroom? Perhaps an upgrade of the kitchen or bathroom would be useful (luxury faucet, continuous tiling to ceiling in the bathroom, etc).

Smaller buildings or apartments

Try to get a good idea of ​​the work that is required to get the maximum return from your property. It is often the case that smaller apartments and houses that can be rented out to several people yield the most return.

View 10-15 properties

It is rare that you, as a starting investor, immediately achieve success from the first property you view. It is not uncommon to view 10-15 or more properties before you find the right one. Viewing more properties also gives you more and more insights. You will learn something new every time, as you gain more experience you will have to visit fewer and fewer properties to find the right one, this is a matter of knowing what you are and are not looking for.
Also take a contractor to a (job) building, to get a quote faster. Or even to see if they have the time / desire for the job for which you would need them.

Consult with property managers and brokers

In the current real estate market on Curacao, finding profitable properties is quite difficult. There is a lot of competition and the prices are high. This does not make finding suitable premises any easier. In short, talk to real estate agents, property managers and other professionals in the real estate world. Let us know that you are interested. A good network is very important in these times!

Go count!

Always make sure you know what you can charge for rent for the property. And I am not only talking about the rent as it would apply to the property in the area, but also look carefully at what type of tenant you rent out. If you ask too much rent and your tenant starts to complain because he cannot afford it financially, and he is therefore forced to leave the building, vacancy will arise and the return will disappear like snow in the sun and on Curacao that goes very quickly.

Financing real estate on Curacao

Where many people fail is financing a rental home. However, there are several ways to finance real estate.  Next,  brief overview:

  • Bank financing. In short, a real estate mortgage especially for rental. You can often get this cheapest (5-6%) at the large banks (read MCB Vidanova Orcobank RBC) However, these parties are actually limiting their portfolios Here you are often limited to a mortgage for 70% of the value of the house in rented condition.
  • Today there are many different crowdfunding platforms, and some of them are dedicated to real estate. Here you can finance real estate at even higher interest rates (5-7%). Sometimes up to 90 or 100% of the market value.
  • Private capital. If you are good at networking it is possible to find private capital. This is often useful for quickly finding money for a purchase. Here you borrow up to 100% of the home value for a short time, to refinance it later at more favorable conditions. These temporary loans often have annual interest rates of 7-10%. Nowadays you can also get mortgages from private persons via online platforms. These are often limited to 70% of the market value. You often pay 6-7% for this.

Valuation of real estate on Curacao

To know how much you can finance, you usually have to have an appraisal carried out. This is more expensive than for a normal home. To calculate the value in the rented state, the annual rent is often taken and multiplied by a factor. The problem is that that factor varies per location and sometimes even per appraiser on Curacao. Overall, this factor will be between 10-12. So for a home with a rental price of NAF 800 / month, centrally located (say factor = 12), the rented value would be approximately NAF 115,000. With 70% financing you therefore get a maximum of NAF 80,500.
In the example above, you still have to bring a large bag of your own money to be able to buy the property. After all, you still have to pay the buyer costs and the difference between the purchase price and the amount financed.

Exit Strategy on Curacao

It is important when buying real estate on Curacao for rental that you also have an exit plan. At some point you will have to sell the property again. This may be because you have found something else, you want to live on the assets in the property, you have financial problems (think a divorce) and have to sell quickly, or because you die and your heirs do not want to continue with it. . In any case, never buy a real estate object that is difficult or impossible to convert into liquidity again. Properties that are difficult to sell, especially in times of crisis, are, for example, holiday homes at B location or older but large homes.

Investing in real estate: buying first property on Curacao

When you have found a property on Curacao, it starts to get really exciting and interesting. First you have to negotiate the price with the seller. However, be strict with yourself here, set a maximum and stick with it! If it doesn’t work, then you shouldn’t be afraid to walk away from the negotiations. The selling price ultimately determines how much return and profit your investment will yield. So never buy too expensive!
When a price has been determined, the preliminary purchase contract can be drawn up. This can be done through a broker, but you can also do this yourself. There are several concept purchase agreements available on the internet. Keep in mind that with a complicated purchase of (for example) several buildings / units already rented out, an experienced broker / lawyer can be very useful. Be aware of your risks and know when to call for help.
As soon as the purchase contract has been signed and the resolutive conditions have been settled, you go to the notary together with the seller. Here you have the property transferred to your name and possibly a mortgage.
You now own a property for rent!

Start renting out

You can rent out yourself. In that case you have to place advertisements, show people around, set up selection procedures and screen people. This takes a lot of time and if you do not do this every day you can also choke on the wrong tenant. Then you have to draw up and sign a rental contract, followed by the key handover and inspection of the house.
You can therefore outsource all of this to a real estate manager. These often require 0.75-1 monthly rent + O.B. for recruitment and selection. After that you will pay about 10% of the monthly rent in management costs. This includes administration / support, and possibly “technical maintenance” (read: someone who goes to see the air conditioner in the middle of the night when it no longer works, but you still get that bill if something needs to be done) .
We see outsourcing real estate management as useful because of taxes and risk management.

Real estate management

If you have engaged a real estate manager, you don’t have to do much yourself. Often (and this depends on what services you purchase) it is no more than just agreeing to the proposed new tenants and signing the lease.
If you do the management yourself, you will therefore have to collect rent. You will have to visit the property regularly for an interim inspection. But you are therefore also responsible for following up on late payments. And possibly the legal process if things really go wrong. Having legal expenses insurance is therefore certainly a must if you are going to manage it yourself (it is also recommended if you outsource the management).

Real estate maintenance on Curacao

It is always wise to draw up a maintenance plan for your property. This gives you the opportunity to call in contractors in time (so you have time to arrange a good quotation). But also to ensure that you have enough cash to carry out maintenance.

Doing it yourself is cheaper

Note that the property manager often arranges emergency maintenance. But he / she does not arrange your long-term maintenance (although you can sometimes also outsource this, if you do not live in Curacao for example). You are therefore often responsible for your property yourself and it has its advantages if your property is in good condition. It generates more money, is often vacant for a shorter period of time when changing tenants and is less worrying. Improving your building in terms of energy consumption is also becoming increasingly important, because energy efficiency is increasingly included in the rental price and the selling price. It deserves attention to take a good look at this when buying your (first) real estate.

aan & verkoopmakelaar Curacao

Adriaan Smit founder and CEO of Sunlife Real Estate

Feel free to contact us at for more information or advice when buying a property in Curaçao.

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Categorieën: Bouwen op Curacao, development curacao, financieel, News, real estate agent Curacao

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