blog | St. Thomas US Virgin Islands Real Estate

The local Virgin Islands Real Estate market for Vacation Rental / Investment condominiums continues to struggle with very low supply and heavy demand. Rarely does a day go by without receiving an inquiry for one of the “high demand” locations on island. Let me try to help you understand what is going on.

Some of the more popular condo complexes include Sapphire Beach Resort, Sapphire Bay West, and Point Pleasant. These locations offer excellent vacation rental income potential with “minimal” investment. But because these are typically easy to rent (with options on management of units), they provide excellent income. Hence the high demand, along with sellers unwilling to unload their investments. These particular locations are also classified as “condo-tels”- making a purchase slightly more difficult. Why? Because financing in these spots is limited and you cannot get typical conventional financing. For this reason, a majority of sellerss only wish to consider cash offers, and there are usually ample buyers willing to pay cash for these properties. So those needing financing will struggle to be able to purchase in these locations until the market changes.

The two banks willing to lend at these locations are Merchants Commercial Bank and First Bank. MCB is extremely efficient and professional in my experience- they do a great job. But their financing offer includes a five year balloon payment and a higher interest rate than typical thirty year rates you read about online. It may also require a higher down payment- this can fluctuate depending upon the buyer but you should expect to pay 25% and it could be 30%. First Bank, and I am sorry to say this, rarely seems to come thru with a successful loan. I have waited four months for loan approvals of a buyer only to be refused after all that time. Since this has been going on for years, educated sellers may not consider an offer planning to utilize FB for a loan. My hope is FB improves their business in the coming years, because we could use another local bank providing loans. The opinion above is solely my own, but it is something I hear from many others over the years too.

Now, there are other locations where you can purchase and still get a more typical loan. My favorite lender has always been First Liberty, and have closed dozens if not hundreds of deals thru them over the years. They can do loans at some other desirable locations like Cowpet Bay and Mahogany Run. In these cases, a typical 30 year loan with a reasonable interest rate can be expected. But note: CASH IS KING and a seller will always prefer a cash offer if all other terms are the same.

So what can you expect knowing these things? You are in a much better position as a buyer if you are paying cash. It removes the financing contingency and can lead to a faster closing timeline. It avoids the worry of a property not appraising for the sales price. Besides how you plan to pay for the property, you should also plan to move very quickly if a new listing comes up. There will surely be multiple buyers interested in the same condo, so you must act quickly. And you should expect multiple offers. The days of buying something “on the cheap” are no longer here.

Plan to keep up with the market. Speak with an agent in our firm to get on a mailing list if one of these condos does pop up for sale. And be ready to act quickly.

I am often asked where I am from, and when I reply that I live in the VIRGIN ISLANDS, a common reply is WHY? Well, this is a pretty easy question to answer. And trust me, this blog is not even remotely a complete answer. But I thought it may be helpful to give some common answers- especially beneficial to those considering a move, second home, or investment property in the territory.

First of all, the weather in the USVI is ideal. Our low temperature for the year is usually in the upper 60s, while the high rarely goes above 95. So even in the summer, we don’t get the extreme high temperatures that many other places see, and we often have a nice breeze that doesn’t make those temperatures seem as hot as they are. For months on end, our low temperatures are about 70 with high temps around 85. Seriously, it may be as ideal as anywhere in the World.

Yes, we do have hurricanes. And when they hit, it can be a bad situation. Living here since 1991, I have been thru many storms. But over that time, there were really only three “really bad” storms: 1995 brought Hurricane Marilyn, and then 2017 brought back to back storms (ten days apart) with Irma and Maria. So when you really think about it, the serious storm hits are far less frequent than most people would imagine. And when you compare it to other weather phenomena from various parts of the World, you realize there is risk all over the place- fires in CA, tornados in the Midwest, snow storms in the East, and more.

What is there to do though? Well, we have lots of activities in the Virgin Islands. Let’s start with the water sports- sailing, snorkeling, fishing, powerboating, surfing, wakeboarding, stand up paddleboarding and kayaking, scuba diving, and more. Add that with beach relaxation, and you have uncovered some great leisure day options. Unfortunately St Thomas only had one golf course, and it has been closed since the hurricanes- and we are hoping a new buyer gets the golf course open again. But St Croix still offers golfing, so the opportunity is still there. Of course St Thomas is especially well known for its shopping- with super great deals on jewelry. The island is littered with fabulous restaurants- from small local outdoor eateries to fancy beachfront culinary masterpieces. And along with the many restaurants are bars. I won’t try to hide the fact that liquor is inexpensive in the USVI (no import duties on liquor) and bar hopping is very popular. Locals play all sorts of sports- whether baseball, soccer, swimming, sailing, basketball, volleyball, and more. There are ample hiking trails- especially on St John which is 2/3 National Park. Bird watching is very popular and we have a large variety of species. There is a lot of history here on island too, so ample places to learn about these things as part of your shopping and bar hopping days. But there is so much more than what is mentioned in this paragraph.

But let’s get to why people choose to live where they do. Weather and activities are certainly factors, but what about scenery? We live in one of the most beautiful places in the World. There are incredible views from most everywhere. I have taken people on Real Estate tours, and at the first place they see, I’ll hear “this is the nicest view I have ever seen.” By the third place, I have heard it again: “this view is even nicer than the first one”. It just never ends.

And don’t forget the people. I LOVE the people in the Virgin Islands. If I did not feel this way, I never could have lived here since 1991. If you walk into an office, you are greeted with a “good morning” or “good day” almost every time. Just passing people on the street creates similar exchanges. When I spend time in the States, and say “good morning” as I walk by somebody on the street, I usually get a funny glance versus a kind response like I receive in the Islands. But it is not just the greetings that make the Islands special- it is the caring. The USVI is a relatively small place where people know each other. And when something unfortunate happens to one of our own, the entire community tends to rally together to help. It is the primary reason we recover so quickly after a bad storm. Everyone comes together as one for the better of the community.

You like know they are called the US Virgin Islands for a reason. We are a US territory. So as a resident I have a regular cell phone with a US area code and it is not like being out of the country. I get regular mail service. And I file a 1040 just like a US citizen (though it is filed with the USVI Bureau of Internal Revenue, not the IRS). We are not allowed to vote for President of the US since we are not a State, and that is disappointing, but for most other reasons we are very similar to the US.

One negative I often hear about the USVI is the cost. Yes, it is expensive here compared to many other locations. Housing and food being two costs that are quite high. This is not surprising since everything must be shipped to the islands. But these high costs are offset in other ways. First, earnings tend to be higher than Stateside locations. Property taxes are very reasonable. As previously mentioned, liquor is cheap. And our Real Estate market has been very strong for decades- it did not crash like many large city markets in years past.

We at Real Solutions hope you can visit and learn about the Island Life in person. We have no doubt you will enjoy your time here, and at least think about making it a permanent place to live.