Owning a Home vs Owning a Condo in Belize
In Belize, generally, people have the choice between buying a condo within a development, buying land to build, or securing a single-family home. When it comes to buying an investment property in Belize, the ownership structure and rental income of a home far outweigh a condo. Let’s take a look at the Belize market and the comparison of homes and condos in the region;
Owning a home or owning a condo really comes down to personal preference. That being said, it is important to understand the key differences between the two and how they stack up in the Belize market. Condos come with many perks, but they aren’t for everyone, and in Belize, there are many single-family home communities that offer an HOA, professional management, and the many other advantages of having a condo. Whether you should buy a condo or a home, comes down to where you are in life, and what you are looking to accomplish in Belize.
Technically speaking, owning real estate entails land. Condos don’t have it, by definition. Detached houses do. It’s one of the primary advantages of owning a house. Yes, the property needs to be maintained. But you can build a private pool, create a garden, host backyard parties, customize it, etc. One of the primary advantages of investing and owning in Belize is the ownership structure and the fact foreigners can own a property outright with fee-simple title. A lot of condos use strata title, share capital, timeshare, or lease. One reason savvy real estate investors are drawn to detached homes over condos is the fact you get full outright ownership with fee-simple title, owning the land and structure.
Most condos or developments in Belize are owned with co-op shares or strata title. Strata Title enables one to pass physical title to a ‘slice of air with a building in it’ without owning the land that is below it. i.e.: one can purchase and take title to a 3rd-floor unit without owning the shadow footprint of the land below. Many developers around the country erroneously refer to their projects as ‘condos’ when they are not located in a new registration zone and don’t offer any actual title. It should be noted that according to the Belize Strata Titles Act, true condominiums in Belize exist in the New Registration zones where the Strata Act is applicable. If the ‘condos’ are not in the new registration zone then they should be referred to as ‘units’ or ‘residences’ and, in most cases, they will be titled via corporate share certificate(s).
Because of the ownership structure of condos, we suggest buyers pursue opportunities with fee simple title and detached homes. The reason I recommend projects/development like Mahogany Bay where you get the best of both worlds – you receive the benefits of an HOA with professional management of nightly rentals similar to a condo, but you own the land and home outright with a fee-simple title.
Resale of Homes & Condos
In markets around the world, homes are easier to sell and are far more liquid. A condo can be a tough sell in a bad housing market. That’s because, for the most part, a condo is a substitute house. They’re the kind of property people buy only in the most robust markets. But detached houses on privately owned lots tend to be more liquid in all kinds of markets (especially vacation markets like Belize).
There’s also the individuality factor. There’s greater likelihood a home will appeal to specific buyers. Condos on the other hand, are uniform. They’re so similar that one unit doesn’t necessarily stand out from the rest. If there are a lot of units for sale in a condo development, it could take a year or more to sell your unit. When buying a condo it is important to look at the unit count and the entire condo community, this will determine the marketability of your unit when you wish to move on and/or sell it. Your unit will never be worth more than an identical unit, plus upgrades. If another owner sells at a cheap price, that might affect your unit price. The fact that your unit value is usually out of your control is another detractor of condos. Because of this, many condos are often converted to rentals.
Rental Market For Homes & Condos
The rental income potential of homes over condos has ultimately been driven by numerous factors over the years. The most significant factor in the home vs condo debate has been the emergence of businesses like Airbnb and VRBO. Airbnb has become one of the most significant market disruptors in recent history. Although there is a large demand for homes, there are actually far fewer homes in the market than there are condos. This demand is also driven by the fact that Ambergris Caye does not have any ‘all-inclusive’ resorts.
In 2019, 20% of all lodging was booked through Airbnb. That is a massive market share, and in Belize, it is the leading source for accommodation bookings (2nd is bookings.com). What makes systems like Airbnb and VRBO so enticing is the fact that in the Caribbean markets, the percentage of revenue growth for whole-unit (detached) rentals has increased by an average of 76% each year.
81% of Airbnb bookings in 2019 came from whole-units and detached homes. When you look at Ambergris Caye, the year-over-year growth in demand for entire homes has increased by 18%. Comparatively, the demand for condos has decreased by 9%. This could be a product of the post-COVID market, but this was already the trend prior to the pandemic.
What is interesting is the fact that even though the market and demand favor homes over condos, there are actually far fewer homes available in the rental pool on Ambergris Caye, Belize. You can see in the chart below the Airbnb Revenue of detached homes far exceeded the revenue of comparable condos.
One thing to note is that this only takes Airbnb and VRBO data into consideration. That being said, there is far less competition for homes, which can be seen in the room count number below, as Studio & 1 bedroom units make up 55% of the total lodging inventory on the island of Ambergris Caye;
In any market, a big advantage of buying a house or owning land to build a house is that you have total control over the property to remodel or make changes. Another house advantage is that it allows for extra indoor and outdoor space, which is more conducive to accommodating families, children, guests, and pets. Houses also feature more storage space in closets, attics, or basements. Houses offer more privacy because neighbors don’t live as close by as they do in condo buildings.
In Belize, the advantages of owning a home are 2 fold;
- You get full ownership with a fee-simple title and control of the land.
- Your rental income potential is higher with less competition if you own a home.
I am happy to share with you real estate options in Belize with fee-simple title and full ownership.
Whether you are looking at buying a home, land, condo, or have a development/project you would like more information on, I can answer questions about the ownership structure, HOA, and rental management splits.