I ASK them a lot of questions. I ask them if they know the cost to deliver a $2 jug of milk to the island.

For those of us simply considering the purchase of a seabound slice of terra firma, the first step is to consider valuation variables like location, accessibility and the need for, and cost of, improvements. Does the island have a sheltered harbor for our yacht? Does it have a residence? Does it have—or can it support—an airstrip? Does the island have electricity or a generator? Fresh water? All of these factors greatly affect the price, usually more so than the amount of acreage. Indeed, Dillard estimates basic property improvements on a private island return two or three times their cost when the property is resold.

THE 130-ACRE Bird Cay, which has its own airstrip, is in the Berry Islands chain of the Bahamas. Nassau is 30 minutes away by plane.

Many buyers find themselves swept up in the romantic notion of island ownership and abandon their usual business discipline, according to Stephen Roulac, owner of property strategists Roulac Global Places and author of 355 Housing Mistakes and How You Can Avoid Them. Roulac’s father was a developer who owned three islands in the Pacific Northwest. “The consequences of miscalculation with an island decision are much greater than with other financial transactions,” Roulac cautions. “The market for private islands is not deep.”

SECURITY IS a big issue when you are there. It is an even bigger issue when you are not.

Indeed, a credible island real estate agent will usually respond to purchase inquiries by first emphasizing the challenges island ownership entails. “I actually try to almost discourage people,” says E. Ted Horsman, owner of RE/MAX in central Belize and Santa Rosa, Calif. “I ask them a lot of questions. I ask them if they know the cost to deliver a $2 jug of milk to the island.” Would-be islanders do need to carefully consider these types of basic questions. In the end, pragmatism usually wins over romance: the conversion ratio of inquiries to actual purchases is less than 50 percent, according to Dillard and Horsman. Wally Gudgell, owner of Gudgell Properties in East Sound, Wash., who has sold island properties for 30 years, says the conversion ratio of inquiries to purchases is even lower, perhaps only 25 to 1.

Still, real estate agents say unhappy island owners are relatively rare. Many islands stay in a family for generations. As much as any factor, Dillard notes, boredom leads to turnover. “Like owning a yacht, owning a private island is an experience that you want to have if you can afford it,” he explains. “And after a while, some people tire of it.”

VALUE JUDMENT Buying a private island is one way to achieve a welcomed measure of seclusion and respite. It is also an important and complex investment, which we must consider carefully. Factors such as location, accessibility and the cost of property improvements bear on the long-term value of these seabound getaways even more than they do on our landlocked homes.

Appreciating Isles
Private islands have generally proven to be sound investments. Gudgell estimates that prices in the San Juan Islands in the Pacific Northwest have appreciated between 8 percent and 12 percent a year for the last 25 years. “Some years you get no appreciation, some years you get a double,” he says. The Roulac family purchased Coon Island, a two-acre islet off Washington with no utilities, in 1962 for $35,000. In 2001, it sold for $3.1 million.

Neil Wark, who brokers properties near Vancouver Island, receives half a dozen inquiries each day from his website, www.bcprivateislands.com. The Canadian Gulf Islands he brokers are more numerous and less expensive than the American San Juan Islands that lay just to the south. For example, a 5-acre islet in the San Juans would sell for approximately $2 million, whereas an 11-acre Canadian island was recently on the market for $795,000. However, with popularity increasing, Wark estimates the islands of western Canada will double in price during the next five to seven years.

The Abacos and Exumas in the Bahamas, the British Virgin Islands, Belize and the Grenadines are the most popular regions for private islands in the Atlantic and Caribbean. Dillard, who has been brokering islands for 42 years, says their market value fluctuates with the strength of the economy.

Prices in regions with drug or crime problems also suffer. For example, Dillard says Jamaica and St. Lucia are currently rebounding after experiencing some softening in their markets due to crime.

John Christie, head of H.G. Christie, the largest realty firm in the Bahamas, reports that the demand for private islands there has been quite strong in recent years. “After 9/11, it seemed more people wanted their own secure place in the world,” he says. Also, as an increasing number of private Bahamian islands are subdivided, the pool of available properties keeps shrinking, making the 70-odd that remain more valuable.

Undeveloped Caribbean islands tend to sell for at least double that of Bahamian islands because they are warmer year-round, Dillard says. Islands located in friendly nations like Belize, with easy access and physical beauty, command the highest prices.

Private island investment opportunities need to be weighed against the costs and benefits of other retreats, such as a small ranch in Texas, a ski house in Aspen, a townhouse in London or a condo in Miami Beach. “The island could be a great value, but not for you,” Roulac says. If the island’s charms outweigh those of other options, consider renting for a year before actually buying. Researching and purchasing an island usually takes many months and, in some cases, well over a year. Selling, of course, takes a like amount of time, if not more.

Local Expertise
A local attorney and a local real estate agent are our greatest allies in our hunt for our atoll, especially when searching for one outside of U.S. territory. “Hire a really powerful local attorney who is politically connected,” Horsman urges. “It’s not a matter of paying bribes or even premium legal fees, but simply knowing the local players and the local regulations.” Dillard agrees: “With different nations, you are going from English to French to Spanish governmental history. It is very important that it all be done in a certain way to meet government requirements and make sure you have total ownership.”

While properties in the Bahamas and off the coast of Belize are generally available to foreign buyers, acquiring properties in the British Virgin Islands and the Grenadines can be more problematic, according to Dillard. “You will go through quite a lengthy process to get government approval.” Even in the Bahamas, the government will check to make sure we have no criminal record, Christie adds. In extreme cases, governments can reserve the right to reclaim land sold to foreigners.

A title search is much more than a cursory procedure with island properties—especially those under foreign flags. In the Bahamas, Christie explains, there must be evidence of clean and clear title for the past 30 years for an island to be sold. “If someone was sloppy 20 years ago,” he warns, “you could have a problem.” Generally, however, the title challenges for islands that we buy from other private owners prove less vexing. A process called the “Quieting of Titles,” which involves contacting all possible owners and advertising that the property is on the market, can resolve some of the issues. This may take as long as a year.

In 1995, Brian and Jennifer Hew began developing 96-acre Kamalame Cay, now an exclusive private resort island in the Bahamas. Hew, who previously owned a horticultural business in Florida, knew he wanted an island that felt remote, but had easy access for guests and supplies. The Bahamian government did not make the process easy. “The island belonged to the government, and we had to show them we were serious,” Hew recalls. He ended up leasing the island with an option to buy while building the resort; eight years later he was allowed to purchase the island outright. Now the luxury resort boasts 25 700-square-foot guest rooms.

Whether we want to create our own utopia, like Dean Kamen, or develop the island, the costs and complexity of improving our investment are considerable. Wark says building on a Canadian island costs about 125 percent the cost of building on the mainland. The premium is even higher in the Caribbean; Dillard estimates it at 150 percent. “Clients will look at an undeveloped island and realize they must clear and fill, or maybe dredge a lagoon to create a beach and deep-water access,” Horsman says. “Then they realize it’s too much trouble, so they start looking at developed properties. But others love the project.”

The costs of island access and management may also be significant. We must decide whether we can leave the island vacant part of the year, or whether we need a full-time caretaker. On the islands of the Pacific Northwest, hiring a caretaker is uncommon. However, Dillard notes, most developed Caribbean islands come with a resident caretaker. Security is also important. Larger islands may be preyed upon by squatters and are prone to vandalism, fires and other problems. “Security is a big issue when you are there,” Roulac explains. “It is an even bigger issue when you are not.”

Despite these challenges, many owners do indeed find private island ownership agreeable. Gudgell resided on a 4½-acre private island, which he named Allegria Island (yes, we can name our island), for 17 years, while raising a family and running his business. “You live with the rhythms of nature,” he recalls. “It’s a good way to live a life.”