Real Estate in Aruba,
a Paradise for Investors
Aruba has some of the safest environments and investment opportunities in the Caribbean. Since the island is a part of the Netherlands, it benefits from a stable economy and favorable commerce conditions, including complete legal protection under Dutch law and low annual property taxes for foreigners doing business in Aruba.
Even though there are many different industries to invest in, the real estate market is among the most profitable sectors in Aruba. So, whether you’re looking for a summer house, a solid return on investment, or just a new way to start building your money, this little gem of the Caribbean is your chance to achieve financial stability.
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A Foreign-Funded Haven
It’s not surprising that many foreigners picked “One Happy Island” as their favorite place to visit, invest, or even call home over the last few years. This is mostly because Aruba has one of the highest per capita incomes in the Caribbean as well as one of the strongest and most stable economies in the region. All of these factors have encouraged outsiders to consider Aruba as a booming investment destination.
We assure you that, in whatever capacity you choose to invest in Aruba, either personal or business-related, it will be a good and safe investment. Aside from having picture-perfect weather all year round, white sand and turquoise beaches, and local Caribbean charm, Aruba has a cosmopolitan character that draws hundreds of people each year, which makes the island a top tourist destination.
Aruba’s Most Promising Asset
With one of the best living standards in the Caribbean and ongoing profitable tourism in its favor, real estate in Aruba has also gained popularity among second home buyers looking for a vacation home, a place to retire, or an asset abroad.
In addition, tourists who purchase a residence on the island can take advantage of all its benefits, including affordable living while traveling, covered housing, and, most importantly, a high-value tangible asset that can be sold, visited, or rented.
Consistent cash flow, long-term stability, tax advantages, diversification, and passive income are just a few of the benefits you might experience if you choose to invest in Aruba. However, the high return on investment (ROI) makes real estate on the island a game changer. Do you want to know more? If so, continue reading.
Investment Return for Real Estate in Aruba
Real estate investment returns might differ for several reasons. For example, your ROI can be significantly impacted by the sort of estate you choose, which range from residential and commercial properties to real estate investment trusts (REIT). For instance, recent research found that low-rise apartment complexes are among the most profitable properties, with an average ROI of 9.0% within a year and even more if they are considered vacation rental properties.
Even though Aruba offers a high potential for generating income when you use your property for resale or rental, cash flow and growth are not guaranteed. Before considering a real estate investment, it is wise to do local and community research to increase your chances of success.
The location is one of the most important considerations regarding property ownership when you invest in Aruba. At BlueAruba Realty, we’ve got you covered!
The good thing about doing business in Aruba is the potential to grow as a homeowner. You will have a valuable asset no matter how you look at it. Aruba maintains the third-lowest prices per square meter in the Caribbean, extremely low annual property taxes, and a constant, controlled pace of property value growth, all of which make short-term, irrational profits nearly impossible.
How to Calculate the ROI of Your Property
Suppose you are already a homeowner in Aruba or plan to invest in the real estate market. According to Investopedia, there are two basic methods for calculating your profits in real estate:
- The Cost Method: This technique determines ROI by dividing the investment gained from a property by its expenses, such as the cost of purchase, maintenance, and restoration.
- The Out-of-Pocket Method: With this approach, investors use a loan as leverage to increase their ROI.
Your property is valued at $200,000.
Repairs and renovations cost $50,000.
$50,000 is your gain on the property ($200,000 – [$100,000 + $50,000] = $50,000).
With the Cost Method, your ROI is: $50,000 ÷ $150,000 = 0.33, or 33%.
You paid a down payment of $20,000.
Repairs and renovations cost $50,000.
$130,000 is your potential profit ($200,000 – [$20,000 + $50,000] = $130,000).
With the Out-of-Pocket Method, your ROI is: $130,000 ÷ $200,000 = 0.65, or 65%.
Our advice? It ultimately comes down to risk, just like with any other investment. Higher earnings and greater losses grow with investment risk!
Take Advantage of Aruba’s Real Estate Market
According to the Centrale Bank van Aruba (CBA), Aruba’s GDP increased by around 16.2% in the first quarter of 2022, with the tourism industry playing a significant part in this growth. As a result, hotel occupancy rates increased to 62.2%, and the average daily cost increased to $355.30.
Imagine being able to take your family on vacation or get away from your regular life without having to worry about accommodation costs, months-long wait lists for bookings, or cutting into your savings. Investing in Aruba’s real estate can make that scenario a reality. Due to the island’s rapid growth, Aruba has become a refuge for international capital where entrepreneurs can mix work with pleasure.
With this booming economy and high ROI of properties, real estate has undoubtedly become one of the most promising assets on the island and a wonderful chance for investors to move towards financial stability. Are you going to miss out on this once-in-a-lifetime opportunity?
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