For the more adventurous of the 1%, finding your beach can sometimes mean buying your own.
There’s an entire culture surrounding the purchase and management of private islands. Calling themselves “isolamaniacs,” these people tend to be independent, intrepid travellers who aren’t afraid of a challenge.
Tech billionaires like Larry Ellison and Richard Branson have plopped down millions for their own slice of paradise in Hawaii and the British Virgin Islands, respectively.
But you don’t necessarily have to be a billionaire to buy an island. Nearly a thousand islands come onto the market each year, and they vary greatly in terms of size and price — ranging from isles that cost $US200,000 and measure less than an acre in Ontario to 117-acre islands that will set you back $US8.5 million in the Bahamas.
Still, scooping up an island isn’t something just anyone can do.
You need some extra cash, the ability to travel to exotic locations, and plenty of time to invest in a project. A healthy sense of adventure is a must.
Got all those things? Here’s how you could go about adding an island to your collection.
Picking a region
Any broker worth his salt will tell you that location should be your number one consideration.
Consider what matters most to you: Do long flights bother you? Do you want an island you can visit year round, or are you looking for a summer retreat? Would you rather be close to the mainland or somewhere more remote? What kind of outdoor activities do you enjoy? Is the local language important to you? Do you want a sunrise or a sunset?
“In British Columbia, for example, normal people might want an island just off the coast because it’s so crowded on the mainland,” Chris Krolow, CEO of online marketplace Private Islands Inc. and host of HGTV’s “Island Hunters” show, said to Business Insider. “Most of our clients do have more money than others, but not all of them are super wealthy. You have to make sure the island can do what you want it to do.”
Islands can be sold in two different ways. A freehold island, which is much more common in the Caribbean, North America, and Europe, can be bought outright. In Asia and the South Pacific, however, it’s more common to buy an island on a leasehold basis, which means that you’re purchasing the rights to own it for a set amount of time, usually between 30 and 99 years.
Leasehold islands are generally more moderately priced than those sold on a freehold basis, so they could be a great option if you’ve got your heart set on Asia.
“Fiji is an amazing place to buy,” Krolow said. “It’s really up and coming.”
These days, low-lying islands in the Bahamas and Belize are especially popular among the 1%.
Buying some of the most beautiful islands on the market could require travelling long distances. You’ll most likely need your own boat or helicopter to get there from the mainland.
Guests to Branson’s island, for example, can charter his 105-foot catamaran, “Necker Belle.” Larry Ellison’s “Musashi” yacht has been spotted in Hawaii multiple times, presumably making trips back and forth to Lanai, the island he paid $US300 million to own 98% of in 2012.
Krolow says he gets hundreds of inquiries each week, and one of the ways he narrows down the field is to ask seemingly interested buyers what kind of boat they have.
“If they’re asking questions about things like water depth, we know they’re being serious,” he said. “How are you going to get there without a boat?”
You also have to know if the island you’re interested in could accommodate your vessel of choice, or if you’ll need to do some dredging work before you can build a dock.
Accessing the listings
Krolow’s site has more than 500 islands listed, but he says there are maybe a hundred that you won’t be able to find online.
“There are some owners who don’t want to publicly market their islands,” he said. “Agents have access to islands that maybe no one else does.”
John Estephan is a Belize-based realtor who now specialises in selling private islands. He’s perhaps best known for selling Blackadore Caye to Leonardio DiCaprio for $US1.75 million in 2005.
Estephan likes to take prospective clients out on his boat for the day. He charges about $US200 for fuel.
“We spend the whole day out at sea, so people can get a feel of what they can do with an island,” Estephan said to Business Insider. “It truly is a lot of fun, but most people who invest in real estate in Belize have thoroughly done their research and know what they’re looking for.”
Financing the purchase
Once you’ve decided on your island paradise, you should be prepared to pay in cash.
“You might be able to get a bank loan — usually about 60% if you can get one — in areas where the mainland has a lot of development, but banks don’t typically finance private islands,” Krolow said. “Banks don’t like to lend money because they have no idea how to appraise an island. If you have a business on the island, like a resort, you could go off its value, but an undeveloped island is a completeley different game.”
If you’re not planning to move to the island full-time, adding a rental property could alleviate some of the financial burden.
“Even Branson rents out Necker Island,” Krolow said.
Most islands will require some sort of construction work.
There are general infrastructure concerns — solar panels, backup generators, propane refrigerators, mobile communications — and then are more complicated projects.
You might need to clear part of the island to make a beach, for example. Or you might need to dredge the harbour so that it can accommodate you boat.
“If you’re going to develop the island, you’ll need more money,” Estephan said. “If you don’t have the capital, you’re better off buying a condo.”
Generally you should allow for at least an additional $US200,000 to develop an island in the Bahamas or Belize.
But Krolow says that the typical island buyer is independent and looking for this kind of adventure. In fact, he says, islands that are already fully developed tend to be the most difficult to sell.
Microsoft cofounder Paul Allen, for example, spent nine years trying to sell his 292-acre island in the San Juans of Washington. Dubbed Allan Island, it was initially listed for $US25 million in 2005 but eventually sold for only $US8 million in 2013.
A caretaker’s log cabin already stood on the island, and Allen initially wanted to build a vacation home there. He decided he preferred a 387-acre peninsula on nearby Lopez Island.
“Most clients want a project, not just a real estate investment,” Krolow said. “The island market tends to attract people with that kind of entrepreneurial personality.”
Some people who buy islands are hoping to develop them into a resort or other tourist venture. This is especially common in the Bahamas, where islands tend to be low-lying and large.
Before you build, make sure you’re clear on the legal guidelines in your area and whether any part of your island is protected because of ecological concerns.
Krolow, for example, owns a small heart-shaped island in Fiji that has a protected turtle sanctuary on one side. He’s decided to turn it into an ultra-private resort that can only be occupied by one couple at a time.
“We’ll do everything by helicopter, and we’ll only build a villa on the opposite side of the island,” he said.
Your relationship with the local population should also be a top concern. If you’re not going to be spending all of your time on the island, you might need to hire a caretaker.
Krolow cites one example of an island owner in Nicaragua, where it’s common to find old colonial homes guarded by a caretaker.
“This person didn’t think they needed to have one, but when they left and came back they found that people had taken everything, from the walls of the house to the picnic table out front,” he said. “You have to consider, realistically, how much time you can spend there. Are the locals comfortable with you?”
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