A big part of this adventure has been selling, or at least attempting to sell, the B&B. This is a frequent topic of discussion between me and Tom, and real estate sales is a big topic of discussion in Belize in general, both on the street and on the chat boards. This has been especially interesting to us because we are in a somewhat unusual situation where we don’t have to sell on a timeline, and honestly aren’t even sure if we want to sell. We don’t need the money to purchase the next property, we are not leaving Belize and don’t need the money to escape, and the way things are running now, the property is continuing to make us money even though we’re not living on it. We have it on the market because we don’t need it, and with a full time job up here, we would rather not have to take the time to do the administrative work that we are still doing…and since it’s our money that is running it, we feel that we do need to remain involved with the administrative side of the business. Plus, it would be much less stressful to have money in the bank rather than to worry about if the business is making enough money to buy a new battery for the truck, buy a new stove when that one breaks, pay for all the truck repairs and miscellaneous maintenance expenses, and pay for all the annual licenses as those come due. However, Julio and Janeth are doing a great job running the place, and it doesn’t take an excessive amount of time, and in the short time we’ve been running like this it does seem to be running in the black, so we are by no means ready or willing to fire sale the property just to get it off of our plate.
One of the big Belize real estate issues is property valuation. When we first decided to put the property on the market in October 2012, we spent a lot of time doing research to figure out how to price it. We figured it bottom up, top down, and collected comps both on other properties for sale and for properties that had sold in the not-too-distant past. We talked to people in the real estate business here in Belize and got their gut feel, as well as the average person on the street who had put some thought into property values in Belize either as buyers or sellers, or potential buyers or sellers. All of these thoughts and methodologies kept coming up with a number within a surprisingly small range. This worked for us, because the calculation we were the most comfortable with was the one where we figured out what we had put into the property, assets (which are part of the sale), and the business for the past six years as the base property value, plus the value of the business based on its profitability, and this calculation put us well within that range. This pricing meant that we would not be making any real profit on the property, but it also meant that we wouldn’t be walking away with this adventure having cost us a boatload of money.
Because we had put so much effort into honestly trying to come up with a fair price, we were a little surprised by some of the negative, and sometimes openly hostile, responses we had. The general theme of the negativity was that the potential buyer could buy an equivalent 50 acres, put up some buildings, and start a business for a fraction of that price. At first, we spent a lot of time explaining how we had priced the property and why we believe our price is fair. But, it pretty quickly became obvious that we were arguing with ignorance, which is time consuming, frustrating, and ultimately pointless, especially since most of the people arguing had no intention of buying at our price. Apparently, if you read the online propaganda about what it’s like for expats in Belize, the popular theme is that you can get great land for just a few hundred dollars an acre, build on it for next to nothing, and somehow live on manna from heaven. The reality is that any land going for under one or two thousand US dollars an acre is either in a very large tract of land so you have to spend half a million or more for the whole package, in a swamp somewhere or otherwise completely inaccessible, or not yet titled. Even if people manage to find an affordable, decent, legally saleable plot of land, ask anybody who has built here about the costs of construction; it may be less expensive than in the US, but it is certainly not cheap for any sort of quality construction. Then, once you have your land and your building, you need to buy everything else, and many things taken for granted in the US – appliances and furniture, for starters – are way more expensive here than they are in the US.
We also wondered if any of these people had ever started or run a business. They seem to think that they can get some land, slap up a couple of cabanas, and the tourists will start pouring in and giving them lots of money to stay there. Again, ask anybody in the business here in Belize and they will tell you that it takes quite a while to even make people aware that you exist, and longer to build up any sort of a reputation so your inn is a desirable destination. The big guide books like Moon, Fodor’s, and Lonely Planet won’t even talk to you until you’ve been in business for a year, and then they schedule a visit which could be up to another year in the future, and then they write you up for publication in their next issue, which is usually another year after the visit. We were lucky and seemed to hit the publication cycles right so we were in the guide books just a couple of years after opening our doors, but all we can do is shake our heads when somebody tells us that there’s no value in buying our business.
Of course, the ultimate reality in Belize and elsewhere is that every property is worth whatever somebody is willing to pay for it. This is something of a double edged sword when pricing a property, because the obvious temptation which seems to lure many sellers is to put a gigantic, pie-in-the-sky price tag on any piece of property, and hope somebody with more money than sense will come along and see some sort of value in what’s offered. We have heard of some places that have sold for what seems an exorbitant price, but usually after many years of being on the market and a lot of dumb luck. And, many places are on the market for years and years, and never sell. The other side of the sword is that almost anything will sell quickly if the price is low enough, and if people need the cash badly enough they’re usually willing to part with their land. We are smack in the middle on this, where we would like to sell the property so we’re not going to put an outrageous price on it, but, while we’re willing to forego a huge profit, we are not willing to lose money on something that we’ve not only invested a lot of cash in, but also a lot of time and effort. We’ve had people ask us why, since we own everything outright, we’re not willing to just take one third or half of what we’re asking and be happy with a fairly large chunk of cash, and we can’t even begin to figure out how to explain to these people that we haven’t accomplished all that we’ve accomplished in life by basically just throwing money away and giving things to people who don’t want to either work or pay for them.
Being human, we tend to get offended when people try to explain to us why we are being unreasonable in what we are asking. Of course they don’t know that we are both honest and intelligent, and that we have spent a lot of time and thought and research and discussion and effort in coming up with a fair price. People tell us that we will have a hard time finding someone just like us who will see the value in what we are offering, but their mistake is in the assumption that we want to find someone just like us. We don’t. Someone just like us would take their money and do what we did and start from scratch and take the time. We need to find a buyer who wants to take their money and not take six years of effort and expense to get to where the property and the business are right now. However, we also need to find somebody who doesn’t want to consider their money an investment and get a guaranteed return from it. This sale will provide somebody with a beautiful piece of property and the income for a comfortable lifestyle, but they won’t be able to plunk down a chunk of money and expect a return on it without any effort. As with property values anywhere, you don’t have a guaranteed return on your investment when you sell, BUT you get a beautiful place to live in the meantime. We know some of those people are out there, and we are just waiting for them to find us.
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