what are the price/ rental / ROI trends and projections

Wow, you're asking for a lot of specific professional information. Someone might reply but they might also send you a bill 🙂

There are a few realtors who frequent this board. Perhaps one of them can provide some info.

My experience with 1031s is that to offset the cost of the Starker or other "arm's length third party" there needs to be at least a fair amount of capitol gains. If you are thinking about moving equity in the 30%-40% or more range(to purchase price) I would say that generally speaking, you should be in good shape. I know, I'm not giving any numbers but really, neither are you. Do you want beach front? condos? commercial? multi-unit? fixer-uppers? long term? short term? What price range? Even an island as small as STX has a wide range of investment properties with the possibility of being a home run or a strike out depending on the direction a new owner takes them in.

With that in mind, come on down, the water's fine!

In general for STX...

Vacancy rates are always low due to the high demand from refinery contract employees
Rental rates are high for the same reason. The refinery pays a good housing stipend to many employees.

The ROI will depend on your buy-in price. Real estate prices rose dramatically on STX starting about two years ago for a period of 9 months or so and have since calmed to a more reasonable rate of increase. Landlords who bought in two or more years ago are seeing a much higher ROI than new owners since they can expect similar rental rates, especially with condos. Equity is still increasing all over the island, with some areas appreciating much faster than others. This also is important to take into consideration when selecting your property as it impacts the total ROI dramatically.

Unless you are looking to purchase a luxury vacation villa to put in the short-term, high-end, vacation rental market, most landlords find they get a similar bottom line using their property as a long-term rental as they do with a short-term rental. The short-term rentals require a much higher quantity of time and effort to handle the turn over of occupancy and there is also a higher risk of vacancy. You charge a higher rate, but the expenses are also higher and that usually offsets the gains. Many investors are buying properties to use as long-term rentals and will hope to have a property that will cover its costs initially and then provide an increasing return over time as rental rates increase and property values rise.

One thing to consider when figuring your rate of return is the cost of windstorm insurance. If you purchase a property for cash, you have the option of self-insuring and saving thousands of dollars per year in insurance premiums. You have an added risk, but some properties are built solidly enough that they might be worth taking that risk to pocket the insurance costs yourself.

Alexandra -

You wrote --

"Equity is still increasing all over the island, with some areas appreciating much faster than others."

There are villas on St. John in the $900,000 to $1.1 Million range that have dropped their asking price by as much as $196,000 (about 20%) over the last year. And the shakeout looks to get worse before it gets better. Are you saying the same thing is not happening on St. Croix?

No that is not happening on STX. STJ had seen soaring prices over the last decade while STX had stagnant prices. STX wound up way undervalued in most property categories. We had a readjustment in values that began about two years ago and many properties saw a significant increase over the following 6-9 months. Then things stabilized again with a more reasonable rate of increase over the past year. Most sellers are still getting their asking price or close to it. There were a few pie-in-the-sky sellers who hoped to jump on the bandwagon when prices were increasing dramatically and they found they had overshot the price for their properties when things stabilized, but that's a different thing than having wholesale reductions in the value of properties across the island.

Dear Ms. Bentley:
Thanks for your reply. I'm still mucking around the Internet just trying to find out are the usvi a good place to buy. Your reply suggests perhaps St Croix is not over priced. The reason for my desire for numbers shown over time is simply everyone loves their own little piece of heaven, but Phoenix, Las Vegas and a good portion of the US have charts that should scare an investor. Having lived in St Croix many hazy years ago the islands charm is a siren song that makes me sure I best lash myself and my money to some numbers. Again thanks for taking the time to reply. Doug A.