If you’re living in the United States, you may have interest in building cash flow and profits at The Reserve in Belize. Don’t let misperceptions about owning an income-generating property in another country cloud your thinking. I’m convinced that it’s going to be easier than ever. My wife and I are taking a step-by-step approach.
I’ll share the approach with hopes that it will help you and others understand our investment strategy.
If you’ve reviewed some of my earlier posts, you know a little about how I acquired my property in Belize. If not, check out the article at the following link:
That article explains how I leveraged an investment I made in Costa Rica to acquire 27 lots in Belize. My wife and I are in our mid-50s and our intention is to sell 25 of the lots and build houses on two of the lots. We’ll use those two houses to generate income. That income will help us to pay for the property and then provide us with income during our retirement.
Building Cash Flow and Profits in Belize
Besides the cost of land, we expect to spend roughly $350,000 to build, furnish, and landscape the properties. Our anticipated total cash investment will be roughly $500,000 for each property. We are raising those funds through a combination of sources:
1. I leveraged assets that I own in California to raise some money for my investment in Costa Rica.
2. I brought in other investors and they joined me in making the acquisition.
3. I negotiated a great deal with the developer to finance me on the property.
4. I expect to borrow a total of $500,000 to fully fund the development of each property, and I anticipate that I will keep at least $50,000 of those funds on reserve for unanticipated emergencies.
5. My monthly payment on a $500,000 note, financed at a 6% interest rate, over 15 years, will amount to $4,220.
6. I expect to finish construction on both houses in the year 2023.
7. In addition to furnishing each property, I will also provide an economical vehicle that I will make available to guests.
8. I will provide a job to a local Belizean, tasking that individual with cleaning and maintaining the property daily. I expect to pay a total of $500 each month for this service.
9. I will list the three-bedroom, three-bathroom, pool property on the Airbnb website. On average, I expect to earn an average daily fee of $250 for use of the house and car, with a four-day minimum rental fee.
10. Allowing for vacancies, I expect the property to generate a conservative income of, on average, $5,000 per month, or $60,000 per year.
11. After 10 years, those revenues will have decreased my debt on each property. By 2033, I expect to owe less than $220,000 on each house.
12. I anticipate that the property will be worth $650,000 the day I finish construction. I base that estimate on the fact that the developer will be selling lots in that subdivision for $250,000 in 2023.
13. Anticipating that the property will appreciate an average of 4% each year, the property should reach the following valuations:
a. 2023: $650,000
b. 2024: $676,000
c. 2025: $703,000
d. 2026: $731,161
e. 2027: $760,400
f. 2028: $790,824
g. 2029: $822,457
h. 2030: $855,355
i. 2031: $889,569
j. 2032: $925,152
k. 2033: $962,158
14. If I sell the property in 2033 for $962,158, as projected, I will use those funds to pay off the balance of debt that I have on the property: $220,000. This will leave me with a profit of roughly $700,000 after closing costs.
That is my back-of-the-envelope projection on how I will manage the property at The Reserve in Belize for income and profit. Obviously, no one can predict the future. But when I make an investment, I consider potential for upside and risk to downside. I use the figures above to make my assessment.
If you would like to discuss, please connect to leave me your comments.