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A rental return is a year of rent shown as a share of the price. A house that costs US$300,000 (EC$810,000) and rents for US$1,500 a month (EC$4,050) brings in US$18,000 a year, which is 6% of the price.
On homes for sale in St. Kitts, a year of furnished long-term rent comes to about 5% to 9% of the asking price. The gap between the top and the bottom has less to do with rent than with price, size, location and condition, and a real year of renting looks different again once lease length, fees and running costs are counted.
What do homes for sale in St. Kitts return on their asking price?
| Area | Home | Price | Rent a month | Rent a year | Return |
|---|---|---|---|---|---|
| Half Moon | 1 bed villa | US$179,000 | US$1,300 | US$15,600 | 8.7% |
| Conaree | 3 bed house | US$270,000 | US$1,800 | US$21,600 | 8.0% |
| Frigate Bay | 3 bed condo | US$425,000 | US$2,500 | US$30,000 | 7.1% |
| Frigate Bay | 1 bed condo | US$235,000 | US$1,250 | US$15,000 | 6.4% |
| Atlantic View | 2 bed house | US$320,000 | US$1,400 | US$16,800 | 5.3% |
| Frigate Bay | 2 bed condo | US$420,000 | US$1,800 | US$21,600 | 5.1% |
| Half Moon | 3 bed house | US$650,000 | US$2,700 | US$32,400 | 5.0% |
| Half Moon | 3 bed villa | US$659,000 | US$2,700 | US$32,400 | 4.9% |
Rents are typical furnished long-term rents for each home’s area and size, and match the rent shown on each listing. Prices are asking prices; multiply by 2.7 for EC$.
Why do some homes return more than others?
Rent does not rise as fast as size
In Frigate Bay a furnished one-bedroom condo rents for about US$1,250 a month, a two-bedroom for about US$1,800 and a three-bedroom for about US$2,500. Each extra bedroom adds less rent than the one before. Asking prices do not follow the same pattern, and that is where the returns split.
| Frigate Bay condo | Price | Price per bedroom | Rent a month | Rent per bedroom | Return |
|---|---|---|---|---|---|
| 1 bed | US$235,000 | US$235,000 | US$1,250 | US$1,250 | 6.4% |
| 2 bed | US$420,000 | US$210,000 | US$1,800 | US$900 | 5.1% |
| 3 bed | US$425,000 | US$142,000 | US$2,500 | US$833 | 7.1% |
The three-bedroom condo costs less per bedroom than the one-bedroom, while its rent per bedroom falls by less, so it returns more. The two-bedroom sits the other way round: its price per bedroom is close to the one-bedroom’s, but its rent per bedroom is much lower.
Location lifts rent and price together
Half Moon, Frigate Bay and the South East Peninsula have the highest rents on the island: about US$1,250 to US$1,300 a month for a furnished one-bedroom, against US$900 to US$1,000 in Basseterre, Bird Rock and the Ross area. Prices there are higher too. The three-bedroom house in Half Moon rents for US$900 a month more than the three-bedroom house in Conaree, but costs US$380,000 more, so it returns 5.0% against 8.0%.
Condition sits outside the figure
The one-bedroom villa in Half Moon is listed as is. Its 8.7% assumes the typical furnished rent for its area, so any work and furnishing needed before a tenant moves in comes on top of the price.
Furnished and unfurnished rents are far apart
Every rent here is furnished. The gap can be large: a furnished one-bedroom in Shadwell rents for about US$950 a month (EC$2,565), and an unfurnished one for EC$1,000 (US$370). Furniture is a cost the return does not show.
What does a real year of renting look like?
The table at the top counts twelve full months of rent with nothing paid out. Three things change that in practice.
Lease length
Many Frigate Bay leases run eight months, and others run three, four, nine, ten or twelve. A shorter lease leaves months to fill. Here is the same US$300,000 house at US$1,500 a month, three ways.
| Year | Rent in | Finder’s fee | Left | Return |
|---|---|---|---|---|
| Rented all 12 months | US$18,000 | None | US$18,000 | 6.0% |
| One 12-month lease | US$18,000 | US$1,500 | US$16,500 | 5.5% |
| One 8-month lease, 4 months empty | US$12,000 | US$1,200 | US$10,800 | 3.6% |
The finder’s fee
When an agent finds the tenant, the usual fee is one month’s rent on a 12-month lease, or 10% of the total rent on a shorter one. It is paid each time a new lease is signed.
Utilities
Most long-term rentals include water in the rent, and cable and internet are sometimes included as well. Whatever is included is paid by the owner out of the rent. Electricity is handled in one of two ways: a prepaid amount the tenant pays each month on top of the rent, or an account the tenant opens with the St. Kitts Electricity Company. What is included is agreed lease by lease.
What sits outside these returns?
The returns above compare rent with the asking price alone. Left out are:
- Buying costs, such as stamp duty and legal fees. Buyers who are not citizens also need an Alien Landholding Licence outside Frigate Bay; Frigate Bay is exempt.
- Furnishing and any work before the first tenant.
- Running costs: management, insurance, property tax, repairs and any condo or estate fees.
- Loan interest, where the purchase is financed.
Does the exchange rate change the return?
No. The Eastern Caribbean dollar has been fixed at EC$2.70 to US$1.00 since 7 July 1976. A return worked out in EC$ is the same as one worked out in US$, whichever currency the rent is paid in.
How do you work out a rental return?
Take the monthly rent, multiply by 12, divide by the price, then multiply by 100. For the one-bedroom condo in Frigate Bay above:
US$1,250 × 12 = US$15,000
US$15,000 ÷ US$235,000 = 0.064
0.064 × 100 = 6.4%
To include costs, take them off the year’s rent before dividing. The same condo with a one-month finder’s fee and US$3,000 of yearly costs leaves US$10,750, which is 4.6% of the price.
Where can I see the figures for a specific property?
The rental yield check works out the return for any area, number of bedrooms and price, with costs, empty months and a bank loan. It also shows the price at which typical rent comes to 6% or 8% in each area.
Homes on the market are in condos for sale in St. Kitts, villas for sale in St. Kitts and what under US$300,000 buys in St. Kitts.
Related questions
What does a Frigate Bay condo rent for?
Development by development rents, and what is usually included, are in what a Frigate Bay condo earns as a long-term rental.
Who rents long-term in St. Kitts?
Long-term tenants include local professionals and families, students, university staff and professionals from overseas, spread across the island. See where Ross University students live in St. Kitts.
