No, no, it is not a fantasy, but a way to your Aruban dreams! You can own a property on Aruba.
Most people who decide they may want to look into buying on Aruba usually don’t know where to start… or think that it’s impossible for a NonAruban to purchase. But the truth is is is not only relatively easy to purchase, if you have the right realtor to guide you, but it is, ESPECIALLY NOW, the right time to purchase rental properties you can use as a vacation home. Return on investment on tourism rentals in Aruba is generally 9% and up!
Here are some information you will need to own in Aruba:
- You want to find a good realtor, someone who will work for you! A lot of real estate agencies/agents work “normal business hours” here on Aruba. We at Spazio are available to you 24 hours a day / 7 days a week, even on holidays!
- There is no MLS system on Aruba, but realtors, sometimes work together. If not, it can be a cumbersome process, and you have may have to work as your own realtor, contacting different agencies to see different houses. Most realtors will push you to buy the homes that they have “in house” as they make the most commission. However Spazio Realty and Liz works with ALL realtors on the island and if you see a property you like, even if it is not listed with Spazio, we will arrange a showing and act with you on your behalf! It is all about the client and making sure their needs are met.
- The normal commission rate for the seller is 5%. Also UNLIKE the USA, it is NOT common for the seller to pay closing costs (the will range between 5-7% of your purchase price.
- Taxes are generally cheaper here then in North America. That is you pay a ground tax and then a tax on the house. Compared to a lot o metropolitan areas,those taxes are a lot less!
- Cash is preferred, BUT there is the availability of a mortgage if you need! Most banks will finance a home purchase for Americans/Canadians if you are putting more than 50% down, however the interest rate will be higher than in the States, and you will need to take out a life insurance policy equal to the amount of the loan. The length of your loan can also be adjusted according to your age, for example, if you are 55, expect to receive a maximum loan time of 10 years. Many clients will utilize retirement funds or maybe the equity in their home in North America. Right now this is an excellent option as most vacation rentals are netting over 9% ROI!
- Be careful if making an offer, via email, in person, handshake, phone, etc. Though the in person, phone and handshake are difficult to prove, if you offer and the seller accepts, it is consider a binding contract. If you send an email offer and the seller accepts, it is a binding contract.
- You don’t need your own lawyer to close (transfer of deed). Here on Aruba there are “Notaries” (Attorney’s appointed by govt) who are authorized to represent each party in a fair way. They also act as the title agent (they run title to be sure no liens, taxes, etc). You are more than welcome, however to hire a local lawyer to review the documents, but it can be redundant. The normal minimum time for a transfer of deed here on Aruba is 90 days.
- You can purchase a private property owned lot, BUT you cannot purchase, out right a leased land lot (well there are gentlemen’s agreements possible which I will get into on another day). There MUST be a livable building on the leased land lot in order to purchase.
- If you own a property, as an American, you are allowed to remain on the island for 180 days, without obtaining permits or residency.
- It is very important to ask for the Appraisal Report aka Taxatie Report when purchasing, even if paying cash. Banks here require one that is within 6 months if you are going to finance, however, it is recommended that you ask your realtor for the latest report (I recommend no more than 1 year old) This is because it is not only an appraisal report, but an inspection report. These reports are government “approved” and if there are any problems with the property the appraiser/inspection is bound to list the deficiencies in the report.
Next entry we will discuss the differences in purchasing on Aruba, in property land vs. leased land.