Check out my latest listing, its luxury, its future investment, its the most prestigious estate on the market in the Beautiful Abacos.
I must apologize to my readers, I have been too busy over the past 6 months to sit down and write as often as I should. Since January, I have only had time to write once. I shouldn’t really be taking the time now to write this but I have put it off for too long. There have been some significant changes in the real estate market in the Bahamas lately.
The Iconic Abaco Estate, Man O War Cay.
If you talk to seasoned real estate brokers in the Bahamas how have been in the profession for 20 years or more, they will tell you that historically in the US election year the market in the Bahamas dips. Suggested reasons include pre-occupation of the US buyers, or uncertainty for the US economy based upon who wins the presidency, or simply that would be buyers are putting money into the campaigns of their chosen candidate. Who knows the real reason – there is only opinion and anecdotal evidence. And until 2008 there really was little empirical evidence to prove that the market was up or down. As I’ve written in this blog before, the presence of our Bahamas MLS is a great improvement and tool for the real estate business in the Bahamas. We now have 8 years of good data with the possibility to tease out some real trends based upon real numbers. It’s night and day compared to the end of the 20th century when the internet was still unfolding.
We still have little real access to data from the Government. But perhaps in the future that will change. There is a silver lining to the implementation of VAT – a brand new division of government was established to collect and keep track of Value Added Tax. It is called the Department of Inland Revenue (i know, very original right?) This division is staffed in large part by trained accountants, who will hopefully keep good records. Through the collection of VAT, there may be a beneficial result in the provision of detailed accurate data on the performance of the economy and perhaps even real estate.
The Bahamas still needs to clean up its act in terms of the ease of doing business in real estate transactions. Ask any real estate professional and they will tell you the current system is not sustainable. Excessive costs, taxes, inadequate recording, and insufficient tenure of title are a few of the downfalls in the business. Add to it he need to provide an appraisal for every real estate transaction and the speed with which a sale can occur gets slower and slower every year. It is still possible to close a sale in 2 months, but it is the exception.
Now for some hard numbers: Last year January –June 2015 saw 248 real estate transaction recorded on the Bahamas MLS, the same period this year is posting 291 sales. A 17% increase in sales activity is stellar. Equally positive is the increase from 209 transaction during the 6 month period of 2014, showing a year over year increase of 19%. (Side note: There are 25 properties still pending from 2013 on the MLS)
The table shows a strong growth in sales volume in the Bahamas. I expect this trend to continue steadily. Given this is a US election year which is supposed to be a slow period for sales in the Bahamas and given the data shows a strong market leading into this election, it is reasonable to assume that the real estate market in the Bahamas will see a bumper year. Dare I say bubble? Or is that too early?
If the 17% growth continues, we can expect to see 340 transactions in the first half of 2017.
One interesting point for sellers to note, is that over the past 4 years, there has been a steady 3000 listings on the Bahamas MLS. (this year is 3,010, last year was 3,008). This would tend to support the idea that there are a large number of sellers around the Bahamas who are fishing with prices which are unrealistic. And these sellers continue year in and year out just hoping the movie star or lottery winner comes along to buy their home because it is so much better than the neighbors. While at the same time there is a large segment of the market who are likely listening to their Realtor or broker and being serious about getting their home or land sold. Point is, listen to the real estate professionals, and get second and third opinions on pricing and values. Don’t list with a company or agent just because they say they can sell it for the highest price. Work with the realtor who is giving you the real picture.
There are a few really good opportunities around to take advantage of this growth in the Real Estate Market. One of them is a package of 16 beachfront condominiums in Marsh Harbour. The possible returns could be substantial with the right person at the wheel. Take a look at the details here:
PS: the construction incentive, called the Out Island Encouragement Act, was extended for another year so building materials are still import duty free until June 2017. VAT is still payable though. This is a good reason to start building that dream home now. Call or email if you have any questions about this.
Many times I am asked how the process of buying real estate in the Bahamas works. Often our foreign home buyers (who love the idea of having a tropical home in the islands) are concerned about the process and the security of the investment. I will discuss the Bahamas Investment Safety and Security at another time. Below I have outlined the rough steps and a very rough estimate of the time it takes for each one. I have to qualify all of this by saying the estimates of the length of time it takes vary widely. How quickly a sale will close in the Bahamas is dependent on many many factors, some of which are beyond the parties control. For instance I have seen a financing application take 6 months for approval. I have seen title and requisition process take as long at 6 months due to continuing questions arising from the history of the chain of title.
On the other hand, I have seen instances where the whole process moved like clockwork and the new homeowner had the keys and were enjoying a cocktail on the back porch in less than 7 weeks from the time of first offer. For things to move this quickly under the bright Bahama sun (which seems to slow everyone and everything down to the speed of warm molasses) is not a common occurrence and it is imperative to have patience when dealing with a real estate transaction in the Bahamas.
There is a major factor which can influence the speed of a real estate transaction here, and that is whether a bank is involved providing financing for the purchase and/or if a bank is releasing and existing mortgage on the property being sold. This is partly a result of the Bahamas banking environment being dominated by 3 major Canadian institutions. The final approvals of any major decisions the lending institution has to make is not made here in the Bahamas, it is made offshore somewhere.
That said, the lender won’t commit to financing a purchase until they have a copy of a formal purchase agreement in hand. We commonly insert a 21 day financing clause in purchase agreements which allows the buyer 3 weeks to formalize their loan and get a commitment letter. 3 weeks may seem like a good length of time, but I would suggest working on getting as much of the paperwork as possible into the loan rep, before making an offer. They will take 2-3 weeks just make a decision, so if they are waiting on something from you like a reference or utility bill that will hold the hole process up. I would ask 3 times for the complete list of all the documents they will need from you just to be sure that all the bases are covered. In my experience they always come back a week later and say they need one more thing, and often that happens more than once.
With the 21 day financing clause inserted into a formal “purchase and sales agreement”, if you don’t get the loan secured you can get your deposit back and everyone can walk their separate ways. The vendor is often weary of entering into an agreement which is dependent on a bank partly due to the time off the market with no guarantee of a sale and partly due to a bit of expense in hiring a lawyer to prepare a purchase agreement and work with the purchaser’s attorney on the deposit etc. Title investigations typically don’t start until after the financing commitment letter is in hand. Once the title is approved, they we move to conveyance drafting and approval and then the mortgage would be drawn down.
Time to close a cash sale (no mortgage involved) is 60-90 days. Time to close with a bank mortgage will be 90-150 days. So keep in mind you won’t be able to take possession of the home for some months while waiting on the lender to do their thing. Some people will purchase a home in cash and then leverage the cash back out with a mortgage after the purchase as it allows them to take possession of the home sooner.
- First step is to get the ball rolling with the bank and get a nod. (about a 1week)
- Second we put in the offer to purchase, negotiate and hopefully reach agreement in principle (1-2 weeks)
- Third you retain an attorney top represent you in the transaction, put up a deposit with the seller’s attorney’s ‘Escrow Account’ and the purchase agreement is executed by both parties. (1-3 weeks, this begins the real process of purchase, get appraisal, all paperwork to bank, references, etc.)
- Forth, you put in the formal application for financing, provide the bank with a copy of the executed purchase agreement and go through the motions with them. (3-5 weeks) (If Necessary, no bank financing involved, it would skip straight to the title search)
- If the buyer is getting a permit from the Foreign Investments Board, the application gets put in right away and approval of the permit can take 2 weeks up to 3 months.
- Then, once the mortgage is approved and you have a commitment letter in hand. Your attorney begins title search. (3-5 weeks)
- Once title is approved the vendors attorney drafts a conveyance, it gets approved and the vendor executes (2-3 weeks)
- Then the bank gets a copy of the conveyance and begins to draw down funds. (2-6 weeks)
- Once the funds are disbursed, the sale closes and you can take possession. (you get the keys).
So, the long and short of it – it could take as little at 6 weeks to close a purchase or it could take as long as 6 months and it all depends on the seller, the buyer, the attorney’s involved, the government for the permits and often most importantly the lender. So make sure to have the right people involved who are attentive, motivated and on the ball to see the sale happen.
I recently had a sale occur where the buyer’s attorney lost the purchase agreement after the purchaser had signed it and neglected to send it to the seller’s attorney for 3 months. So while we all thought the sale was proceeding, it hadn’t even started. Stay in touch with your lawyer and keep them moving things forward.
Lastly, having an experienced and motivated real estate broker or agent on your team can have a very positive effect on ensuring the least amount of frustration and delay. HG Christie is one company with a strong team of professional sales staff who know the ins and outs of Buying and Selling homes, land and development property around the Bahamas. Feel free to comment and tell us your story in buying or selling real estate below. I hope you enjoy this post and find it somewhat useful.
The WordPress.com stats helper monkeys prepared a 2015 annual report for this blog.
Here’s an excerpt:
A New York City subway train holds 1,200 people. This blog was viewed about 5,700 times in 2015. If it were a NYC subway train, it would take about 5 trips to carry that many people.
Check out this great write up on Realtor.com if you are buying, selling, re-financing, settling an estate, investing or even considering building.
The 17th annual Big Hill Box Cart Derby on Elbow Cay (Hope Town) in the Abacos was once again a cool day of racing and fun. The event raised over $2,500 which will aid in supporting youth programs on the island, which include the Hope Town Junior Sailing Program, the Abaco Swim Club and in the past has helped to build the community children’s playground among many others. It happens every year on the Saturday of American Thanksgiving, this year’s date was 28th November 2015.
Held every year and organized with the leadership of Stafford Patterson, Patrick Stewart and Tom Hazel, it wasn’t always so. The early days involved bric-a-brac carts built out of anything participants could find in the backyard. Stories are told of carts made of dock pilings and steel drums or plywood with skateboard wheels and other crazy contraptions. In the beginning there were many epic crashes, sadly (though maybe a good thing) this is long before everyone walked around with a smartphone video camera. I was not around for these first iterations of the derby but the stories are entertaining to say the least. And fortunately there were no tragic accidents to dampen the spirit of the event. There have been some serious crashes over the past years involving a few broken bones and lots of road rash. Happily this year there were no major crashes which is a testament to how far things have come and the quality of the carts and drivers.
The winner for the 6th year straight in the Senior division was Otis Christian Wilhoyte with the gravity defying custom built cart named “White Lightning”. The youngest driver and the winner of the junior division was Blake Cash who was fearless and determined.
This years Derby saw a total of 13 Junior entrants (age 9 – 14) and 9 Senior (15 – up) entries, 1 down from last years 22 (Juniors 8, Adults 12) so our Junior entries saw a 50% increase due to the introduction of a kit for beginners. The two classes (Adult and Junior) run under local rules, very simple and basic with emphasis on safety. Overall winner of the day is determined by a combined score from the 3 categories (Downhill, Slalom and Showmanship).
A breakdown of the entry types show that the Juniors had:
- 5 American Soapbox style carts
- 4 Beginners wooden kit cars (new Class)
- 3 Scrapped together
- 1 Skateboard
The Adult class had:
- 3 Scrapped together
- 3 fancy homebuilts
- 2 American Soapbox
- 1 Skateboard
There were many more attendees this year and most of whom stayed longer to watch than past years due to the addition of 75 bleacher style seats alongside the racetrack. Attendance estimated to be 300+. The event could not happen without the support of almost 40 volunteers who help to organize, get permits, track preparation and clean up, bleacher setup, food and beverage setup and sales. The event truly speaks to the community spirit of the island.
Here is a short video ditty of the carts running down the hill:
More Photos:
In summary, this is a wonderful example of why Abaco is a great place to live, visit or invest in a second home. Hope to see you there next year.
Hi Dwayne,
I ran across your blog ‘myabacoblog.com’ and I was hoping you could answer a question I had since you seem to be familiar.
I’ve read that to work in the Bahamas (I’m a US citizen) you need a work visa, which is somewhat of a difficult affair to secure. What about vacation rentals? Is it legal for me to purchase property in the Bahamas, and then earn income on it as a vacation rental without having a work visa?
Thanks for your help!
-Steve
___________________________________________________________________________________
Hi Steve,
Glad you found my blog useful. I don’t write as often as I should.
The short answer is no you don’t need a work permit to own and operate a vacation rental home. The Bahamas has no income tax. income from a rental property is not considered work although it is income. You would need a work permit if you wanted to work as a bartender or store manager or construction etc. etc. Non-Bahamians can buy/sell/own/lease etc. real estate with relatively little regulation from the government. The majority of the vacation rental homes and condos are owned by non-Bahamians. Many use VRBO.com or similar websites and most have property managers who deal with everything in return for a percentage of rental income.
It is very similar to the situation when a non-US citizen comes to the USA. They can get a 6 month visitor visa, they can purchase real estate in the USA and they could rent it (I believe they have to pay tax on the rental income) but the non-US citizen does not need a work visa to own and collect the rent. They would need a work visa if they were actually gainfully employed by a company though.
Best regards,
Dwayne Wallas
I just have to share this amazing opportunity for a little investment. Drastic Price Reduction! Affordable Investment. It won’t last long and the area is beautiful. 8 miles of stunning sandy beach nearby, Abaco/Bahama Parrots stop by every morning to say hello. Utilities ready for connection. These lots regularly sell for $15k to $20k, leaving the lucky owner with instant equity.
If you have any young children, buy it now and save it as a college tuition investment fund. The cost of tuition always goes but historically the prices of real estate have risen at the same rate. In the USA, currently the average cost of college tuition is $10,000 per year according to collegedata.com. Assuming the area of Bahama Palm Shores grows and the value of the land in the area rises over the next 13 years, if you have a 4 year old child, and they head off to college at the age of 17 this investment could cover the cost of 2-3 years tuition. This could be your ‘ace in the hole’. Call today.
http://www.hgchristie.com/property-details/abaco/vacant-land/AS11377/
Albany Resort Residences, Gym Facility
by Lee McCoy
When looking to start or expand your current business, there is no better way than to utilize a pre-engineered steel building. These buildings are custom designed to your requirements – whether your end use is open retail space, storage & warehouse space, a garage, or a back-of-house facility, the buildings are tailored to your location, specifications, and requirements.
Available on the market are many used facilities. These buildings can be relatively new builds or can be over fifty years old. Steel buildings have been in the Bahamas since the early 20th century. Not only have these buildings been subject to our extreme weather conditions (think salty, humid air), but design requirements have been drastically improved over the decades. From a safety standpoint, you want to make sure the building will withstand hurricane force winds and the environment they are located in.
The first step would be to get an appraisal done by a licensed real estate company, such as HG Christie. The real estate agent (or the buyer/seller) can hire an authorized manufacturers representative to inspect the building also. This inspection would point out any obvious problems and compare the cost of a new building to repairing the existing building. TMC Engineering Ltd. is an authorized Star Buildings distributor and a 100% Bahamian company, with experience in refurbishing and installing new buildings throughout the islands. Any inspection fees charged (which are nominal) are applicable to any work done on the project post-purchase.
There are a host of things to consider when purchasing a used steel building. Many modifications can add value and life to the building, such as a retrofit roof system, added insulation for energy efficiency, and replacing wall panels. Structural steel can be repaired and any damaged secondary structure can be replaced with new, galvanized materials; screw and bolts can be replaced with new long-lasting fasteners. If anchor bolts are worn away, new bolts can be drilled and epoxied into the foundation.
Whether you choose a new build or a renovation project, there are a variety of other considerations. PBR and standing-seam roof systems both offer excellent features, but vary in cost. Factory applied material coatings (essentially paint) can add years of protection to new materials. Wall panels come in a variety of options, including hidden-fastener panels and insulated metal panel systems. Insulation facings and thicknesses can decrease your BEC bill significantly, with a quick pay-off. Doors and windows can add function and curb-appeal, while skylights and ventilation make the building comfortable.
If you’re going for a new building or a used building, be sure to get an experienced builder on your side early in the process. This can save you on costs and schedule, and make sure your facility is up to your standard.
About the Author:
Lee McCoy is the President of TMC Engineering Ltd., a 100% Bahamian company founded in 1999 and based in Nassau. They are an award-winning, authorized Star Buildings distributor and installer. TMC has experience in projects large and small throughout the islands of the Bahamas & the Caribbean.
Contact:
TMC Engineering Ltd.
#8 Moseley Lane
Nassau, Bahamas
242-394-3410
