CHICAGO - You don't have to be Larry Ellison to own an island.
You may not have the $500 million to $600 million it probably cost the Oracle CEO, one of the world's richest men, to buy Hawaii's sixth-largest island, Lanai, recently.
But call a friendly island broker and you'll find that around the globe, there are hundreds of rocky, sandy, grassy or coral islands on sale at any time. They can be everything from idyllic to uninhabitable, within spitting distance of a major city or many hundreds of miles from anything, with their own airport or inaccessible by anything but a canoe.
Farhad Vladi says he has sold more than 2,000 islands in 22 countries since 1972, when he got his start. His company, Vladi Private Islands, has sold islands to Johnny Depp, Diana Ross and Tony Curtis (who loved it so much, he bought two).
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Prices typically start at $500,000 for a 2-acre island, says Chris Krolow, CEO of Private Islands Online, who has seen an increase of 10 percent to 15 percent a year since 2005 in the number of islands advertised, with inquiries growing by a steady 5 percent. The vast majority of islands for sale are priced between $1 million and $2 million.
But he warns that the final bill could vary wildly.
"A lot of islands look great, but they are great for the birds, and you can't build anything on them," Krolow says. "One client just spent $300,000 on a barge, just so he could get equipment over to his island."
As much as you're king or queen of your own fiefdom, you also get to rule over mosquito abatement and waste removal - often without electricity, purified water or a nearby medical facility. And in a literal twist on the underwater mortgage, islanders who build too close to the shore could scramble to keep their dream homes intact when sea levels rise.
But that's not scaring away people like Angela Proffitt, a wedding and events planner based in Nashville, Tennessee. She's been looking for more than a year for an island to host destination weddings. And she thinks she's found it: Eratap Island, a 14-acre site also known as Castaway Island, located in Vanuatu, an archipelago of about 83 islands in the southwest Pacific, east of Australia. The asking price: AUD$1.25 million, or US$1.247 million.
"It's looking really good at first glance; it's in the shape of a guitar and I'm from Music City," Proffitt says. "And there's another private island nearby that's already serviced by a boat."
Still, buyer-beware scenarios unique to island buying abound. Here are a few tips for would-be Ellisons itching to buy their own island:
1. Try before you buy. Rent the place first. "Get your feet wet and take a look at what it's like," Krolow says. "Very often, you may realize it's not quite right. It might take you six hours to get there, for example."
Note that renting an island in a posh, sun-drenched setting for a week could cost you as much as buying a home in some markets. North Island in the Seychelles, located in the Indian Ocean, goes for $4,000 a night — multiplied by 14 bungalows, for a total of $56,000 a week. But for that price, you get 120 employees to wait on you hand and foot. Angelina Jolie and Brad Pitt have been among the recent renters, Vladi says.
2. Know the difference between "freehold" and "leasehold." Depending on the nation you're dealing with, islands will differ in terms of real estate ownership laws. Freehold means you own it forever, whereas leasehold means you own the right to lease the property from the state. "A typical American buyer wants to be able to stick their flag on it and say, 'I own this island' to impress their friends," Krolow says. And that's a big deal, considering that by his estimate, more than 80 percent of prospective island buyers are Americans.
3. Don't assume that you can build whatever you want on your island. Those who sell islands know the allure of making people think they'll be buying their own country. But let's say you want to build a runway there for your private plane. Not so fast. You'll need permits just as you would to extend a porch back on the mainland. For that reason, "Any island with a pre-existing anything on it is a big bonus, because it saves you a lot of money and headaches later on," Krolow says.
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4. Think politically stable. Krolow and others stress that miles of white sandy beaches don't mean a thing if your neighbors are pirates or militias. The global recession has knocked down island prices in line with real estate elsewhere, he adds, so don't sacrifice safety for saving a few dollars. You'll have adventure enough getting your hideaway up to speed for habitation. With its 800-plus volcanic and coral islands, Fiji may sound like an idyllic South Pacific paradise. But the Republic of Fiji has had its coups — not once but three times - in 2006, 2000 and 1987.
5. Find a good caretaker. Krolow suggests that if you buy an island and don't expect to live there year-round, get a local caretaker. Expect to pay in the $50,000 range annually, though Krolow stresses that those costs will depend on the local economy and where you buy. A good source for finding caretakers is the non-profit Caretaker Gazette, located at caretaker.org.
6. Get your (green) house in order. Buyers need to strike a thoughtful balance between their survival and that of the island. With ocean islands, you'll need technology to turn salt water into drinking water, Krolow says. Such systems, which use reverse osmosis, typically run between $6,000 and $10,000. He also says that modular homes, which can be shipped and built easily, are a wise choice: "Islands have very fragile ecosystems, and you want to make sure you are building with the island, and not against it."
(The author is a Reuters contributor.)
(Follow us @ReutersMoney or at http://www.reuters.com/finance/personal-finance. Editing by Jilian Mincer, Beth Pinsker Gladstone and Jan Paschal)
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