Buying rental properties in the Dominican Republic. Worth it?

42 Replies

How much do you have to pay and how much are you expecting to make?

I'm busy arranging a deal to buy brand new penthouses in the Dominican Republic in a growing beach town with investors. Thanks to my local partners on the ground and the fact that I use to lend money to Latin American banks when I was a banker, I have access to financing and leverage, which my investors can take advantage of. That way, they have to put much less cash down and get much higher returns. And also they have less risk because we personally know the developer. And we will do the short-term renting for the investors, unless they insist to do it themselves.

Depending on the figures and the risks, it could be a great investment. Tourism is booming in the Dominican Republic and some ares grow even more than the average. Make sure you know what you're doing or do it with people who do know. As the saying goes, the return of your money is more important than the returns on your money.

@Nathan Asher Robson well something like 10 Americans have died there recently under suspicious circumstances, likely do to illegal (read poisonous) alcohol. Do you really want to be in that sort of environment?

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@Nathan Asher Robson

My wife and I went down there a few years ago and we didn't book a stay at an all-inclusive resort. I just booked us for a week at the InterContinental in downtown Santo Domingo, next to the Zona Colonial. I figured, "What could go wrong?"

That was very clearly on the top three biggest vacation mistakes I've ever made in my life, and I've made some doozies.

Touristy beach towns and nice little places where you can feel safe do not exist in the Dominican Republic, as far as I could tell. We ate breakfast in a place with a security guard toting a sawed-off shotgun. Walked to an all-night pharmacy in spite of being warned, "Señor, no white people wanna be walking around here this time of night."

The guide we hired on the street to show us the Zona Colonial kept his pepper spray handy and explained to my wife that he was very happy she wasn't wearing any gold around her neck that would leave her open to a snatch-and-grab.

As far as we could tell, the only safe place for American tourists is behind the fence of an all-inclusive with a careful bus trip shepherded by guides to see the Zona Colonial.

We went for an evening beach walk and these two little teenage boys actually tried to rob us.

Not a vacation destination I would put money into.

@Caleb Heimsoth   The % of people dying for those same circumstances in the USA is higher.   (This is media Sensationalism) and also take into consideration people go nuts with all-inclusive, 24/ 7 open bar and 24/7 Buffet. They over do it and chances of intoxicating ( no doubt are higher) anywhere in the world , if mixing a bunch of alcohol like the world is going to end.    

I was born and Raise in the Dominican Republic and I will go to these ressorts 1or 2 times a year and still do it living here in the USA.  and I can testify is not how it is or telling on media...

In another note @Nathan Asher Robson , , Yes it could be worth it, (DEPENDING WHERE) NEED TO BE VERY PICKY THOUGH. PUNTACANA IS an emerging market there for millennials, Middle class, Middle- high Millenials are deciding to get out of the busy City (Santo Domingo) and REnting out villas or buying in that tourist area. looking for lower pace environment and more easy going lifestyles with perks you cant get on the city. ( plus Rent and Purchase is cheaper with better quality compare to the city. 

@Caleb Heimsoth

Are we going to succumb to media sensationalism? Are we not above that on BiggerPockets? Do you know how many US tourists go to the Dominican Republic each year? Do you know what percentage those 10 people represent? By the way, these deaths are over a period of a few months. Do you know what's the murder rate in New York or Los Angeles? Are you not going to visit or invest in those cities because of that? Don't you think you have higher odds of getting shot by doing your groceries almost anywhere in the US than being poisoned in the Dominican Republic?

While the cause of the death is still being investigated on the US side, the Dominican government says the death are from natural causes (obviously they have a vested interest in saying so). But the fact is we don't know for sure yet. It is a problem in that it results in some US tourists redirecting their holidays to some other places as long as the issue isn't fully resolved.

Regardless, the Dominican government has proven times and times again in the past that they will do whathever they have to to guarantee the security of the tourists in the country.

@Jim K.

If that was your experience, I can understand your initial reaction. I went to Santo Domingo and stayed in the Zona Colonial and I had absolutely no issues and actually didn't see any police anywhere. I went to meetings to places where tourists don't go and I had no issues there either, apart from the fact that the traffic was crazy at rush hours. I went to some beach towns and was walking alone in the middle of the night (even in places that were not too busy) and I never feel threatened. I'm met many girls traveling alone saying the same thing. So please don't generalize.

Just look at the impressive statistics of the tourism growth in the Dominican Republic over the last 20 years. Do you think US tourists would go there in droves if it was that dangerous or unpleasant.

Don't take my word for it though. The US government issues travel advisories when it could be dangerous for US citizens to travel somewhere. Even after the deaths mentioned by Caleb, the Dominican Republic is still at level 2, which is the same level as the UK, Germany or France!!

It's thanks to frightened people that people like me are still able to find incredible deals in the Dominican Republic after 20 years of uninterrupted tourism growth. It's like in the US in 2008, you could get unbelievable deals because most people were frightened. Maybe the same people who have been waiting to buy high in 2019 and will sell low in the next downturn.

Don't get me wrong, when I heard first about the deaths and when I hear stories like Jim K's, I get this visceral reaction of doubt. But then I get the facts right, go over my fears and stay the course. Like everywhere, this makes the difference between taking action and watch others making money while on the sidelines.

Originally posted by @Nathan Asher Robson:

@Jim K.

Thanks for this little dose of reality.

I guess it’s back to the drawing board for me.

Just keepin' it hundred, man. My wife with the guy standing outside our breakfast spot. If this is what you need to do to reassure your patrons, well, I think you know where I'm coming from.

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@Jim K.

I dare to say that spot is in the Malecon at Adrian Tropical.. Having Security is pretty standard like also having a Maid. and chofers I grew up with securities in my house 24/7 also my entire neighborhood and all establishments have one ( even the church I used to go too had a few.. ( is like having an alarm pretty much. Is just standard. (Don't get me wrong, like any country in the world you will have some scary spots and insecurity)  but again it depends where you go, what time etc...  ( but is not SIRIA, war zone) Nor black market kidnapping 24/7. (lets put it this way, is like going to a refined Hood.)  It will all the depend with how you hang out with , or go too, time etc.. but it still a livable place. 

If anyone want to be extra secure. Go to Romana or CAP CANA ( TRUMP IS PARTIAL Investor on that project, and Jack Nicklaus is the golf course creator. ( Is literally a Private City. Google it you will be amazed, no everybody knows about it (UTOPIAN City) and la Romana is also a private city, complex or Gulf villas community (HUGE, Like a City ) ( . (Michael Jackson got married there with Presley's daughter) Vin disel has a house there, Shakira, And the Clintons... Check it out...

Regards.  

PLease, no one take this rebuttal as offensive is just that the vicious media Sensationalism really is blowing things out of proportion.   

Love you all ; ) 

@Mike Lambert   @Nathan Asher Robson Is possible to get that #s there. I know about a few Brand new projects selling from 45k to 80k  and rent goes from 800 to 1200k US , Great finishes, Real wooden doors, marble floors, granite on bath and kitchen, travertine on bath... ( I suggest cash if purchase cos conventional loans are 11% interest "the lowest") that will kill you . 

Originally posted by @George Munoz:

@Jim K.

I dare to say that spot is in the Malecon at Adrian Tropical.. Having Security is pretty standard like also having a Maid. and chofers I grew up with securities in my house 24/7 also my entire neighborhood and all establishments have one ( even the church I used to go too had a few.. ( is like having an alarm pretty much. Is just standard. (Don't get me wrong, like any country in the world you will have some scary spots and insecurity)  but again it depends where you go, what time etc...  ( but is not SIRIA, war zone) Nor black market kidnapping 24/7. (lets put it this way, is like going to a refined Hood.)  It will all the depend with how you hang out with , or go too, time etc.. but it still a livable place. 

If anyone want to be extra secure. Go to Romana or CAP CANA ( TRUMP IS PARTIAL Investor on that project, and Jack Nicklaus is the golf course creator. ( Is literally a Private City. Google it you will be amazed, no everybody knows about it (UTOPIAN City) and la Romana is also a private city, complex or Gulf villas community (HUGE, Like a City ) ( . (Michael Jackson got married there with Presley's daughter) Vin disel has a house there, Shakira, And the Clintons... Check it out...

Regards.  

PLease, no one take this rebuttal as offensive is just that the vicious media Sensationalism really is blowing things out of proportion.   

Love you all ; ) 

Absolutely, George. It's always a pleasure learning from people who are not spouting generalities and obviously know what they're talking about. That is indeed Adrian Tropical on the Malecon. You will also then no doubt acknowledge what it's like walking on the Malecon at night. So why is paying for armed security so "standard" throughout the Dominican Republic? Why do so many private citizens outside the all-inclusive resorts and gated private communities you mentioned find employment carrying large firearms to protect other private citizens? Why do you need armed security guards in church? If those men with guns were to go away, would other men with guns show up and commit violent crimes?

May peace, love, and understanding be with you always. And maybe a dude toting an MP-5 at all times in public, well versed in the Mozambique Drill. Two in the chest and one in the head always leave the target dead.

@Jim K.

Yes this forum is to learn from each other indeed!

To answer your question maybe it's because, in the Dominican Republic, unlike in the US, you are not allowed to carry guns on you so you need professional personnel for security? I spent a while in Las Terrenas this year. This is not a gated community or a ghetto for tourists. It is a place where Europeans and North Americans live in harmony with the local population. I went to the touristy places and off the beaten track. I don't remember seeing a single of those guards. as to the police, I saw them much less in the street than in Canada or the US.

As you rightfully mentioned, let's not generalize.

In most developing countries or in places where there is a great disparity with rich and poor people for that matter, there will generally be security left and right. It's a fact of life. Don't forget there are poor areas in North America that have issues as well.

I live in Arizona, where we are allowed to carry guns on us without a permit, both concealed or out in the open. And it is rare that I see anyone with one.  I certainly would not want to vacation in a country where there were people all around with shotguns.  That would not be relaxing vacation. 

I have been living in the DR since 2006 and I love it here. It a huge island and has pretty much everything. Plus, cost of living is fairly cheap. As far as security, it's a latin thing. The like bars of their windows and security guys. AS far as investing in the DR, there is no real financing. I prefer to invest in new construction. There is no time limit to build here. You can build little by little when you have cash.

As far as $50k studios, I would look away from punta cana and towards other areas like Las terrenas, Cabarete, Sosua, Puerto Plata, etc. I feel like punta cana is over built and you are competing wth tons of huge resorts.