STR Rentals to Corporations and Businesses.

[Richard Badamo]

Hello,

We just finished setting up a 1 bedroom, 1 bath apartment in Punta Cana, Dominican Republic. It is in Vista Cana, a gated community that is still under development. Although it is still under development there are sufficient ammenities available at the apartment project and within the community and people have started STR rentals. The prices are soft, mostly due to owner desperation in my opinion. I would like to explore longer term rentals of 3 months to 1 year to corporations or businesses. Does anyone have any suggestions as the best place to list the apartment for this type of rental?

Thank you,

Richard

[Mike Lambert]

@Richard Badamo you're welcome.

The increase in tourism is no cure for the problem, as it brings more supply and more competition. Take two examples from Mexico, which is like the Dominican Republic on steroïds when it comes to tourism. Puerto Vallarta and Tulum are two Mexican tourism hotspots. Both of their real estate markets exploded during the pandemic but there behaviors couldn't be more different.

In Tulum, you can build as far as the eye can see. The land is flat and there's plenty for sale. The local authorities gave building permits to everyone and their mother and a huge overbuilding ensued. In Puerto Vallarta, there are geographical restrictions to building in the form of mountains and permits are much harder to get.

As a result, the market in Puerto Vallarta is still doing well and consolidating after a big increase during Covid while Tulum has crashed post-Covid. If you own a rental condo there, you might have the choice between renting at a rock-bottom price to not have it sit empty most of the time or try to sell at a (big) loss.

I hope for you that I'm wrong but I think Punta Cana looks much more like Tulum. Little constraints to building and, like in Tulum, there's a whole industry building a huge amount of condos there (who often look all the same) to sell to (unsuspecting) investors, which translates into huge competition when renting and/or selling.

To conclude, you do some due diligence on the market to find out if my fears are justify. You can try to do your best by trying to differentiate your property or find a different business model or sell, especially if you still can do it at a profit.