Is a Private Island a Good Real Estate Investment?

Posted by Staff Reporter (media@realtytoday.com) on May 03, 2016 06:30 AM EDT
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Cyclone Zoe Devastates Remote Island Of Anuta more big
TIKOPIA ISLAND - JANUARY 2: A village on the remote island of Anuta is shown January 2, 2003 which is part of the Temotu Province of the Solomon Islands. Approximately 3,700 South Pacific islanders were affected by a tropical storm known as Cyclone Zoe when it hit the area December 29, 2002 damaging trees, village huts as well as island communications. Aid officials recently flew over the areas hit by the storm and saw signs of normal life. However, official storm aid is still a few days away. (Photo : Andy Hall/Australian Defense Force/Getty Images)

Many people are purchasing real estate properties as a means of diversifying their portfolio. While a home can definitely increase your assets and help you save up for your retirement, is a private island considered a good real estate investment? Or will buying one only lead to more costs?

As previously discussed here on Realty Today, a real estate investment is often better than stocks. An investment in real estate can yield a 6.8 percent return in three years as of February 2016 and 4.4 percent return in one year.

The majority of consumers in the U.S. account 46 percent of their investable assets in real estate. This is a bit more advantageous as compared to the stock market, which can offer an 11.8 percent return over a period of three years and only a 1.8 percent in a year during the same period.

A real estate investment, however, can only be good if you choose to invest in the right properties. The location is one of the most important factors to consider when choosing to invest your money in real estate.

In the case of private islands, however, can it be considered a good real estate investment?

Realtor.com notes that private islands are a true getaway for most people. What better way to relax and keep yourself away from the hustle and bustle of everyday life than to rest on your very own island neatly tucked away from the cities?

The publication also notes that some private islands do not even cost millions, with some almost at the same price as an average home. However, it goes without saying that there are also costs to owning one.

For example, you would need to hire a caretaker to be responsible for everything in your private island while you are away. Aside from this, you will also need the means to go to and from your island, which calls for a boat and gas to run it. One of the good things about owning a private island as an investment, however, is that you can rent it out to other travelers through rental sites such as Airbnb.

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