A Sound Solution

News

It’s no secret that ripples created by the worldwide financial crisis are gently lapping on the shores of the Cayman Islands, affecting the price of real estate here perhaps not to the same extent as in parts of the United States but the impact is nevertheless undeniable. Yet, interestingly, a slow market, for some people, holds the key to the treasure chest of future financial security.

I have a friend living here on Grand Cayman who was extremely frustrated by the performance of his retirement investments. For 15 years, he’d been investing a sizeable amount of hard-earned money every month into his and his wife’s voluntary retirement plan. Yet, in the past 12 months alone, he’d had to watch from the sidelines as his pension investment lost half its worth. There had to be a better option, he thought.

And so we began discussing the potential real estate opportunities in today’s market that could better meet his needs, and decided that it is probably one of the best times to buy real estate in the Cayman Islands.

We found a property that both my friend and his wife love. It has some canal frontage with docking facilities. And it was on the market at a price that had just been reduced, making it very good value indeed. They bought it and now pay the same monthly amount to cover the loan and strata fees that they were paying into their residual pension fund. With tenants in the property, their asset has become a stable income-producer. Its dock gives them somewhere to put their own boat, rather than parking it in their yard. And they are confident, too, that the property has long-term potential to become a very valuable asset that they may pass on to their children.

Further, because they live on Grand Cayman, it’s an asset that they can easily manage in a hands-on way at a fraction of the cost of the fees they were paying to their pension plan manager. By buying in Cayman versus elsewhere, a proposition they’d considered, they’d also sidestepped other costs such as property taxes, capital gains, income and inheritance taxes, plus the cost of managing a property from a distance which can be difficult and costly.

My friend also draws comfort from being able to see and touch his investment. This gives him a sense that he has more control over his destiny than if he was relying on advisors on Wall Street or elsewhere who, he feels, tend to lose sight of the people investing in the complex structures they create. “It began to feel,” my friend said, “that everyone else was making money except the investors!”

The beauty of their investment purchase is that they are now building equity in an asset and, at the same time, the net rent they receive covers more than half of their monthly payment. This means that their household outgoings are 50 per cent less than they used to be. Plus, they will benefit from an appreciating asset that was purchased at the right price and time. Their long-term plan is to build a local real estate portfolio that will be debt-free by the time they retire, thus providing them with a steady retirement income which would be insulated from the instability of Wall Street.

It’s a buyer’s market at the moment…which is a magical time to find properties that will help you to realise your dreams. I encourage you to consider the Cayman real estate market today.