Own Your Own Island!

By Sean O'Neill
Kiplinger's Personal Finance

Tom Brisson strides through the cathedral quiet of a spruce grove and emerges into a sunlit clearing. On an outcrop of granite, ocean waves spray a halo of mist. The elegant port town of Bar Harbor, Maine, appears across the water.

"The only thing missing from this view is a hammock hanging between two trees," he says.

Brisson owns 13-acre Heron Island -- a 20-minute boat ride from Winter Harbor, Maine. The 58-year-old financier had never seriously set his sights on buying an island until last summer. But a few weeks after retiring from his job as a Sallie Mae financial analyst, Brisson saw Heron Island pictured in a magazine article. The Potomac, Md., resident quickly visited the island and sized up its value.

Go to Kiplinger's Personal Finance to view a slideshow of ten tempting islands.

On the plus side, it's close to Maine's top attractions, and he plans to boost the value of his wooded fiefdom by building a three-bedroom house and a storage building. He lowballed the $795,000 sale price with a successful offer of $715,000.

The own-your-own-island dream starts at about $150,000. But you can also rent a private island for rates that start at about $4,000 a week for two.

Consider the 1.75-mile-long chain of five islands in Maine's Brans Mill pond. You could build a cabin on the largest of these islands (4.8 acres), from which you could fish for brook trout and white perch. The archipelago was recently selling for $229,000, which included a lot on the mainland for parking your car and launching your watercraft. The pond is an hour's drive from Bangor.

If you can afford waterfront property on the mainland, you can likely afford to purchase an island. As a rule, islands are about 20 percent cheaper per acre than waterfront mainland in the same locale. Yet islands offer more overall waterfront for your dollar -- with 360-degree views, of course.

What's more, the long-term investment value of an island often equals that of comparable waterfront property. The main reason is the diminishing supply of islands that can be developed. State governments and environmental groups are restricting construction of buildings on many undeveloped private islands, especially along the coasts of Florida and Maine. This trend is boosting demand for islands that don't have restrictions on renovating or replacing existing buildings.

Before we tell you how to buy one, ask yourself whether you're cut out for island living. Real estate brokers say happy island owners share two key traits: a fondness for privacy and a drive to overcome challenges.

Because islands are typically in resort and fishing areas, you'll need to gear down from your rapid urban or suburban pace to a rural rhythm of maņana. The most content island owners have a sense of humor about the time it may take to rent a boat, hire construction contractors or perform other tasks.

For Brisson, the strongest draw was the new challenge of island ownership. "I believe that drama and anxiety in small doses tend to keep me younger and more sharply focused," he says.

But he is still learning patience. Building a pier and clearing the island of deadwood may be the only tasks he finishes in his first year of ownership. That's a typical pace, says James Trimble, of Trimble Realty, the brokerage that closed Brisson's deal.

Roughly 50 islands in U.S. waters are currently for sale. The most comprehensive listings online are at PrivateIslandsOnline.com. If you are interested in a particular region, contact a broker who has a long record of listing properties there. Such brokers often do not advertise listings on the Internet to protect the privacy of the owners.

Freshwater islands, especially ones in lakes in upper-midwestern states, including Minnesota and Wisconsin, are usually the most affordable. Several convenient islands that are 10 acres or less recently sold for between $150,000 and $900,000. Saltwater islands off northern states, such as Maine and Washington, generally cost more; islands that are 10 acres or less recently listed at $230,000 to $3.5 million.

Temperate and tropical islands have their pluses and minuses. Those in the northern U.S. often sit on bedrock and are sufficiently high and sheltered to be protected from surging tides -- unlike tropical islands, which usually sit low on mangrove or coral reefs and are prone to flooding. Then again, tropical islands -- with their palm trees, conch shells and white-sand beaches -- are the stuff of our island dreams. The starting price for a tropical island off Florida's coastline is $3 million.

Of course, storms threaten islands in the tropics more than those up north. Just ask Nick Hexum, the 36-year-old lead singer of the eclectic rock band 311. In 2002 Hexum bought a private, 5.5-acre island in the Florida Keys for $2.8 million. He set out to make major renovations to the house and add nonindigenous plants, but many of the improvements and much of the landscaping were lost during recent hurricanes. Hexum is now sticking with native plants and materials that can survive storms better.

As a result of the storms, the island has become a financial burden for Hexum, who is managing to break even by renting it out. He stays on the island himself only about four weeks a year. Still, he is pleased with his investment and says a buyer recently offered him $4.1 million for the property. Last fall, Hexum renamed his Money Key island Melody Key.

If your tastes are a bit more exotic, you'll be pleased to know that about 3,000 islands are for sale in foreign waters. The top private island brokers are Kevin Cross, of Bahamas Realty (in Nassau, the Bahamas, www.bahamasrealty.bs); Farhad Vladi, of Vladi Private Islands (in Hamburg, Germany, www.vladi.de); and Cheyenne Morrison, of Coldwell Banker (in Queensland, Australia, www.luxuryrealestate.com/islands).

Lately, the hottest markets overseas have been Belize, Panama and Costa Rica -- where divers explore coastal barrier reefs, birders flock to admire exotic species, and many of the inhabitants speak English. Prices have risen up to 20 percent a year for the past few years.

Last year, Doug Ingersoll and his wife, K.T., who own a real estate brokerage in Loomis, Cal., paid about $250,000 for Tranquility Caye, a nearly 20-acre island off Belize's Atlantic coast. The undeveloped island is within a mile of great snorkeling, and it's an hourlong boat-and-plane ride from Belize City.

But buying their fantasy island wasn't easy. When locals caught wind that the yankees were island-shopping, the owners hiked the price of a property that the Ingersolls liked. They solved that problem by having a local broker scout anonymously on their behalf.

Foreign ownership also has its perils and pains. In Belize, financing an island may mean paying a 15 percent interest rate and putting 30 percent down. The Ingersolls paid cash for their land. Title insurance is practically unheard of in Belize and many other tropical countries. (The Ingersolls took a risk by going through the sometimes-unreliable local title-history process; they recommend hiring a broker who uses a U.S. title-insurance company.)

Most challenging of all, the permit process for making any change to the island -- such as dredging, burning materials or building a house -- can take months and cost hundreds of dollars. More than a year after their purchase, the Ingersolls don't have approval to build.

But owners say such worries hardly detract from the dream-come-true of owning an island. When word of Brisson's purchase got out among his friends and relatives last August, the dozens of happy, supportive calls he received wowed him.

The top question wasn't "Have you lost your mind?" but rather "What will you name your island?"

He told them he is keeping Heron as the name. On the day he sent in his final bid for the island, a heron landed on his window.

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