With the recent news that Oracle CEO Larry Ellison has bought Lanai, Hawaii’s sixth largest island, the first question that came to our mind was, “Who even knew it was for sale?” It turns out that, for the 3,200 residents of this rural, almost forgotten island (when it comes to tourism), history has been a string of deep-pocketed western owners who don’t mind losing $20 million to $30 million dollars each year. But our purpose here is not to sit down and hash out whether or not Ellison’s ownership will be a good or bad thing. What we’re more concerned about is pondering the inherent swankiness in owning an island.
First of all, Ellison isn’t the first celebrity or business billionaire to decide he wants an island to call home. There have been a few notable island owners in the past. Actor Marlon Brando was one. So was Leonardo DiCaprio. Toss in Johnny Depp, Diana Ross, and Tony Curtis for good measure if you like. The secret of this niche area of real estate is that, worldwide, there are hundreds of rocky, sandy, grassy, or coral islands for sale at any one time. Lanai’s exact sale price was not released but experts peg it between $500 million to $600 million. Luckily, you won’t need quite that much to buy your first island. According to Chris Krolow, CEO of Private Islands Online, prices start at about $500,000 for a small 2-acre island, and the average sale price is between $1 million and $2 million.
Owning a slice of island paradise can hold a handful of surprises for the initiated. In order to avoid island-buying remorse, please review the Swank Life Guide to Buying an Island below before writing that check.
1. Try it on for size. It’s a VERY good idea to rent your island first. Spend some time there, and not just overnight. It might take several weeks to a few months to get a real feel of the place. This first step becomes even more critical if you plan to live on the island full time. Landlubbers sometimes don’t realize the time it might take to commute from the nearest coastline. For example, would you be okay if it took six hours by boat to get to the nearest grocery store?
2. Know the local real estate laws. Real estate ownership laws can vary wildly from what we’re used to in America. Here we understand the concept of “buy” to mean that we actually own the thing. This is known as freehold. Some countries don’t allow foreigners (meaning Americans) to outright own land. They operate according to a leasehold, which allows you to lease it from the state on a long term basis, often as much as 99 years. For practical purposes, this might not make a difference, but you should be aware that ownership might eventually revert to the state.
3. Building could include headaches. Even though you may have paid cold, hard cash for your little island, remember that it is part of a larger country, and things like adding on a private airport could run you into a heap of bureaucratic red tape. You’re going to need permits, air space clearance, and more. For this reason, it might make more sense to buy an island with the kinds of amenities you want already in place.
4. Political stability. While there’s no crime into buying an island for the adventure of it, most people have a limit on how exciting they want things to get. For example, Fiji is a South Pacific tropical wonderland with more than 800 islands, many of which are for sale. The problem is that the government has been overthrown by coup three times in the last twenty-five years. As American businesspeople who owned property in Cuba when Fidel Castro came to power in 1959 learned the hard way, sometimes new governments decide to appropriate property without compensation.
Here are a few more tidbits to keep in mind. As the swanky new owner of an island, you get to rule over mosquito abatement, waste removal, electrical outages, water purity, and medical emergencies on your own. Not to mention that a sea level rise or tsunami could give a whole new meaning to an underwater mortgage. We’re not trying to dissuade you from following your dream here, but simply want to insure that your visions of swankiness don’t have you looking at the transaction through rose-colored glasses.
And always remember – you can’t drink sea water.
The Jake Swank Team
Flickr / mendhak