Investing, Financing & Title Insurance Investment in Caribbean property has traditionally been one that has returned handsomely. Twenty five years ago you could buy beach front property in the Cayman Islands on Seven Mile Beach for as little as $100.00 U.S. per foot for a half acre building site. The last available 1/2 acre site there sold in 2001 for five million dollars. Similar things have happened all over the Caribbean and even in places, to a lesser extent, like Belize in Central America. Investment is nothing new to many in the United States, especially real estate investment. Want investing to be fun again? The fun part is that you have something besides a piece of paper. The fun part is you have a vacation destination or retirement location that is just plain fun to visit. A solid return on investment AND a tan ! What a great combination. Property on a Caribbean island and a return. Financing - Until recently, (February 2006), financing was only available for citizens and legal residents. That has now changed and there are a few banks in country that offer financing on properties here. Although the interest rates and down payments are higher than what you are accustomed to, the fact that they are available is very good news. HSBC bank, with two locations here on the island can offer you a loan application and help you through the process. U.S. citzens can be approved within four business days, and Canadian citizens within fifteen days. Another alternative, few people are aware of, is that to the IRS an investment is an investment. The possibility of financing your purchase here via an IRA, IRA-SEP, 401K, etc. is very real. There are many variables in accomplishing this but overall it, in most cases, can be done. Why do you not know about this? Easy and logical when you think about it. If you ask your financial broker, the company that administers your retirement fund, or banker/advisor about this, they will either not know about it or not want to tell you. Why? If they tell you they loose a client, the annual fees, dollars generated by trades you may make, all money out of their pockets. Giving a client away is certainly not in their interest, especially when you plan on moving those dollars off shore. How do you do this? It really depends on how much work you wish to do and/or how much spare time you have on your hands. . If you want to just have someone else accomplish this task for you, you can deal with a company like “ENTRUST”. We have had clients deal with them pretty regularly and they seem to do a very professional job. Their web page is http://www.newdirectionira.com This group has offices in both Colorado and California. My experiences with them have been very positive. If you wish to be proactive, have a lot of time and save a few dollars, this is actually something you can do yourself. The first step would be to read up on it. I would suggest the purchase of a book called “IRA WEALTH -Revolutionary IRA strategies for Real Estate Investment.” By Patrick W. Rice. This will outline the strategy for you and will point you in the right direction for “do it yourselfers”. Have some cash and some money in retirement? Any financial combination of funds works in that a Honduran Corporation can easily and inexpensively be formed and stock issued proportionately. IRA or other retirement dollars can be designated for some shares of the corp. and you personally for others. ‘Is it safe?,’ is the next thing that may come to mind. Considerably safer than the stock market now a days. In fact, if you so choose, you can get Title Insurance here on most properties just like you do at home. Because the Honduran Government guarantees foreign ownership, many have chosen not to do this, but it is an option that is available on most properties. Title Insurance - We as a Real Estate company have utilized “First American Title” for our clients' title insurance. You can contact them regarding questions you may have. “In Short”- Overall the above has given an overview on investing and financing on Roatan. If you feel that this may be something you are interested in, and need additional information, please feel free to contact us and we will be happy to answer any questions you may have or address any concerns. To me it is the best of all worlds. A Caribbean property that has nothing but up side potential- 1) in a safe democratic country, 2) on a Caribbean Island that has a tremendous upside future, 3) is mainly English speaking with very friendly people and 4) best of all, you get to visit and enjoy your investment instead of getting a monthly statement that you sometimes barely look at. Residency- In Honduras, like the U.S., you cannot have people from foreign countries just land and live. Not everyone can be a resident here either but there are various types of residencies you can qualify for. RETIREE (Pensionado) – for this type of residency you would need to show that you have at least $1500 US per month income from outside Honduras. This can be a pension-type income (permanent, from a government or financial institution, or business pension fund or personal funds). That $1500US/month then needs to be converted to the equivalent amount of Honduran currency which is Lempiras. You need to allow about six months for processing. Benefits include the importation of personal belongings, including a car, without paying duties and you are not taxed on your retirement income. Living here as a U.S. citizen gives you considerable tax benefits so you pretty much become tax free. Be aware that many come here thinking they can apply for their retirement residency and that the tax/duty free shipping is automatic. It is not. You need to apply for a “Dispensa” in order for that to happen. RENTISTA – This category of residency is available to those who have a monthly income of $2,500US or more. This income must be from rental properties, investment dividends, interest, or other sources that are not related to employment. To the best of my knowledge this does not have to come from the U.S. which means any country off shore qualifies. INVESTOR – This type of residency requires an investment of $50,000US or more in Honduras. You need to provide a project description, timeline for investment and proof of having transferred a minimum of $25,000US into Honduras at the time of your application. It is also necessary to make a cash deposit of $5,000US in the Central Bank of Honduras to guarantee the investment. The business plan must come together within a three year time frame and would need to show how your project would benefit Honduras and its people. SPECIAL PRESENCE PERMITS – This last option is a new category that applies to many situations previously covered by regular residency. There are specific requirements, depending on the category of permit. For example, students must provide proof of their studies and economic support. Employees must submit proof of employment, and the employer must also supply documentation for the company. Missionaries and aid workers must provide a letter from the church or institution they are working with, along with proof of economic support. Laws and requirements can change so this is merely an overview. If you are considering any type of Honduran residency you need to communicate with a qualified Honduran attorney. Legal “tid bits” - You say you would like to come down and look around for some property but if you find something you like there is no way you could come back in a month and close on the property. Not a problem. There are a couple ways of handling this actually. One is via a power of attorney that you generate here allowing your attorney, real estate broker or agent to sign on your behalf to accept the property in your name. This can be done with as little as a written statement signed and witnessed if it is a cash transaction or if it is a mortgage, (you found a Seller that will finance the sale for you), a formal legal and registered POA which is generated by an attorney also while you are on the island. OK say you were undecided when you left the island but after further thought you decide you wish to proceed. The sales agreement can be done via fax, you then have two options. The first would again be a POA, (which in each instance will be about $500 - $700), or you can generate a form letter that we can provide, get it notarized at your local bank and then send it to your Secretary of State office in the state you reside in, (sorry Canada, would think you may have to go to the provincial government people to find out about this). With this notarized form sent to the Sec of State you request what is called an Apostille which they will provide via snail mail. That you then send to either your real estate broker's office, (which we hope is Roatan Real Estate), via snail mail or directly to your attorney of choice, via snail mail or FedEX. From this point it goes through a process within the government. First there is a legal, professional translation of the documents to Spanish. It then goes to the Department of Foreign Affairs in this country, the Minister of Interior and the Supreme Court also here in country for all of there blessings, stamps and red tape. The attorney then takes it to the Registry and files it. Now you can proceed to closing. The cost is about the same. Now you may ask yourself why in heavens name you would want to wait out that procedure ? Well basically, once you hit the states again getting a POA means that you have to travel to the nearest Honduran Consulate. If you live in Los Angeles, San Francisco, Miami, Chicago, New York, New Orleans, or Washington DC, no problem. If you do not it means travel expense, more time off work, etc. The Apositlle you can pretty much do from your Lazy Boy recliner. Will it take longer and cost about the same for the attorney? Yes. It is easier on you? Also yes. Bottom line is you really do not have to be here to close. I have actually sold property to people who have never set foot in the country went back and forth with me with many emails and photos. Faxed or scanned contracts, wired funds and boom they were proud owners of their own little piece of paradise. In all honesty, I am not real comfortable with that scenario in that it somewhat is on the shoulders of the Sales Agent and/or Broker but believe it or not it happens. Ok now, after closing, you are the owner of your dream property or probably a great investment at a minimum, (far more exciting than that stock certificate you have for General Motors or whatever), especially the way property has and will continue to increase in value on the island. You need to be aware of a few more things. There are closing costs, attorney fees, etc. These, at this point in time run from about 4.5% to 5.5%.. I know that seems high, many of you are in the 2% range, but in all honesty they have just come down from 7% at the beginning of this year and some places in the Caribbean are in the 30% category. Basically they still do everything here by hand. And when I say by hand I mean it. The odd sized colored paper is placed in non-electric typewriters and the title documentation is generated. Then a notary stamps it with a rubber stamp over his signature, (they just LOVE rubber stamps here), and when you get your title back, (usually about 2-3 months, but have seen it as long as six months), you will have all sorts of postage like stamps all over it on the interior pages. If you did the Honduran corporation,(s), (see last months letter about this accessed on our web site), you will also get stock certificates, (which are bearer so you want to keep them under lock and key, safety deposit box or your brokers safe until your next visit). Join the many that are looking to alternatives to other traditional retirement places and take a good look at Roatan.