Building a Home on the Island

I was just talking to a friend who bought a piece of land thinking it would be cheaper to build than to buy an existing property. He is finding that not to be the case. Construction costs exceed $200/foot and there is enough high-end building that contractors are difficult to get. If you can find beachfront property, there are strict restrictions on building. You might want to read about Lindquist Beach and how the owners were prevented from doing just that!

I have to ask...have you all spent some time here to see where you might want to live? On St Thomas, you can pick up and go snorkeling and diving at a moment's notice from just about anywhere.

My husband has visited St Croix and St Thomas. We are aware of building restrictions in other beach areas of the US that's why we are asking you good people who are local to give us the real scoop. I will check out the Lindquist Beach situation and I appreciate your help.

Good Day - I am having a hard time finding any articles on the Lindquist Beach area. Do you or anyone reading this have a link to more info? Also, did your friend find the permitting process to be lengthy? We are comparing buying an older condo close to the water to buying property on which we "may" be able to build. Thanks.

Dizzy,

The article East Ender is referring to was in Friday's Virgin Islands Daily News. Two years ago some folks invested in some beachfront land intending to build some expensive houses and the government decided to appropriate their land for the public and will pay the former owners fair market value.

You indicated that you are aware of building restrictions in other beachfront areas in the US and I believe you will find that USVI beachfront building restrictions are more stringent than most. Also, I think East Ender's $200/square foot building cost is conservative and that homes on St. Thomas and St. John (where it is much steeper than St. Croix) usually cost more. Lastly, insuring a modest beachfront house will likely cost a thousand dollars a month if it is owner occupied full-time and more if not.

Ah yes, I found the site and read the articles. Thanks. Somehow I can't relate to a large corporation with a $4 mil tract. We would probably be buying in an area already zoned low-density residential. Would the gov't be likely to block the building by an owner of a single family dwelling? $1,000 a month for insurance? Yikes! I have read of some condos trying to self insure. Does anyone have experience with that? Thanks so much for all your help.

When you look at the ridiculous cost of hurricane insurance, it's easy to see why the idea of self-insuring has merit. If you are a home owner and do not have a mortgage loan on your home, you are allowed to self-insure. If you have a solidly built house and it gets hit by a hurricane, it's unlikely that the property will be a total loss. There is a good chance that FEMA will pay you a little towards reconstruction, you can do some of the work yourself, and the $$ you saved by not paying for insurance may be more than enough to pay for any repairs you need to make. As a home owner, you are making the decision to take the risk personally that you could lose your investment if a hurricane leveled your house.

A few condo complexes on STX have voted to self-insure also. The problem with that is that the condos become impossible to sell to anyone who needs to have a mortgage loan to make the purchase. Sellers have to find a buyer who can pay for the condo in cash or be willing to seller-finance the sale. If you do decide to purchase a self-insured condo, be sure to carefully read the HOA documents describing what happens if the property is damaged in a hurricane or through other means. Typically, the owners of all the condos are charged for the reconstruction costs for the entire complex, even if their portion survived the storm unscathed. Be sure you know what you are getting into.

It's not a bad thing to buy a self-insured condo or to make the decision to self-insure your home if you don't have a mortgage company requiring full insurance. What can be bad is if you make such a decision without first checking out all your options and making sure you fully understand the ramifications of your decision.

I wish you the very best of luck in your purchase and/or construction project in the islands.

Dizzy: I am pretty sure you won't find any "reasonable" beachfront on St Thomas, don't know about St Croix. The original plans for the Lindquist property included two multi-million dollar homes. That was turned down, then they came back with a second plan which was squashed by the government who took the property by eminent domain. I guess they felt empowered by the recent Supreme Court ruling? Because there are so few open beaches, there will be more controversy in the future. For example, the Scott Beach/ Compass Point area has supposedly been purchased for a marina/condo development. Has anytone heard about that??

I've heard that story at least once a year for the past seven years. It is true that a new company came in and purchased the marina. Scott Beach is another story. Rumor has it that the shoreline changed so much during Hurricane Marilyn that it is impossible to obtain a CZM permit to build on the road front property.
Pamela

Hey Dizzy,

Alexandra has some good advice.

I have been placing Hazard Insurance that includes Windstorm coverage for some of my clients here in STT. On detached dwellings (not condos), a good rule of thumb is to figure it will cost annually 3-3.5% of 80% of the purchase price (20% of value going to land), with variances depending on the type of construction, hurricane shutters, etc.

Another aspect of Condo's is how they manage the funds. Though they may have insurance, some HOA's do not have regular monthly dues, they fund everything through 'special assessments' and do not keep any financial reserves for maintenace or other expenses. This will also make it difficult to get financing, and makes it hard for you to budget your monthly expenses. One thing you can do is find out if the condo project has FNMA or FHA/HUD approval. This opens up much more avenues of financing. FNMA has just eased the rules for approving condos, and if one is not now approved, they may easily be able to get approved.

Thanks Island Ed. Each bit of advice and information you all have offered has helped us. What a great group!