All Forum Posts by: Mike Lambert

@Junior Jaquet Hernandez

I wouldn't give investing advice to investors in my own country so I certainly wouldn't do it give advice to investors in a country where I haven't invested, as you rightly mentioned.

Mind you, I was actually considering investing there, as I have friends who are in real estate there. I did an extensive research trip that included meetings at the Ministry of Tourism in Santo Domingo, with your country's best lawyers, ... So, I'm not sure I should "better" investigate.

Weighing the pros and cons, I decided not to invest. That doesn't mean that it's no good for somebody else. We all have different motivations and objectives, hence I don't like to give advice, especially unsolicited advice.

As to the occupancy guarantee, what I meant is that a guarantee is as good as its issuer. And I know of developers who have reneged on that kind of guarantee once the promised occupancy wasn't reached so it's not as ironclad as a government or bank guarantee. That doesn't mean the specific guarantee you're talking about won't be honoured but it's a risk. Besides I bet this guarantee is for a limited time (it's often for one year only), whereby the profit the developer makes on the sale of the properties is much bigger than the potential loss he would incur should the occupancy fall short of the promised percentage. This would make such a guarantee pretty much worthless as an indicator of the future occupancy rate.

Also, I'd personally never buy properties with hotel management for reasons I already mentioned but I'm sure some investors like and look for that kind of properties.

While there is only one set of facts, we can have different opinions and it's good that way. I'm not trying to convince you or anyone else that investing in Punta Cana is a bad idea. It could be a great idea for the right investors. I'm just sharing facts and points of view and I trust that it'll help readers form their own opinion and make the right decisions for themselves.

@Junior Jaquet Hernandez

You're very good at promoting your beautiful country and, anyway, as a local real estate agent, we would expect you to be positive because, if you aren't, who will?

I was just pointing out that I know plenty of people who have been to Punta Cana, including myself, and all of us have been in an all-inclusive resort and not in an Airbnb. None of us, including the many people I've met there have done cultural excursions or gone there for the local food. We've just been there for the beach, the food and resting at the resort. Granted, that's not a representative sample but I bet that's what most visitors do.

A few points regarding what you mentioned:

1. They guarantee 60% occupancy. For how long? I know large  and (until then) reputable developers  who have done that and then, when occupancy was below the level, they unilaterally cancel the guarantee. Nothing the owners could do. Then, you generally have to pay hefty management fees, whereby your returns oftentimes end up being less that what you can get in your home country. So why taking the risk?

2. 0% interest rate. For how long? They probably include the interest costs in the price, like the US homebuilders do with the rate buy downs. Anyway that 0% could be great if the deal is good but it doesn't made a bad deal good.

3. The tax exemption benefits are useless to most of us foreign buyers and a pure marketing tool used by the local developers. Indeed, we are taxed in our home country on our worldwide income and capital gains. So, anything we don't have to pay to the Dominican Republic tax authorities (the tax exemptions), we have to pay them to our home tax authorities because those exemptions don't apply. Local developers who market that benefit won't tell you that.

Also, I regularly see ads for large new condo developments so, if I was a buyer, I'd be concerned about overbuilding, especially given my previous remark. We have seen that movie elsewhere.

Finally, yes the Dominican Republic has it all indeed but, sadly, that includes sargassum, especially Punta Cana. We haven't found any solution to that problem. If it gets worse, which it could given that the assumed reasons are pollution and global warming, it could eventually wreak havoc on the country's tourism industry, especially Punta Cana. I know people who have been there when the beach was covered by that stinking toxic algae and they mentioned they'll never go back because of it.

To conclude, it's great that people here have different opinions. It makes for a good debate and that's what creates a market between buyers and sellers. Investing in Punta Cana might be right for the right kind of buyers (like maybe lifestyle buyers interested in getting a little bit of extra income) but they should make sure they know what they're getting into and don't look at the opportunity with rose-tinted glasses.

Sorry I thought you were looking at apartment buildings. If you look at properties with 2 - 3 units, it's classified as residential in the US and it might be the same in Italy. You might just be able to get it with a normal mortgage. But I know there are countries in which the bank don't like to lend with buy-to-let properties so you'd have to check if it's the case in Italy. If it is the case, you look at short-term rentals, you could buy them as second homes but you might be limited in the number of second homes you can get. if you pay cash, you can do what you want of course. So, if you want to use leverage, make sure you understand how the local banking system works and how to best take advantage of it.

Hi Frederico and welcome to BP.

The first question is whether there are multifamily dwellings that are rentals as they could in theory be all condos.

In any case, there is a simple reason for why and it’s because Italy doesn’t have the real estate investing culture we have in North America so there’s no sufficient interest in that to have a portal.

Also, one of the main things that makes multifamily lucrative in the US is the loan products that are available and they’re not available in Italy. Also, property values there don’t generally increase like they do in the US.

Trying to apply US strategies in another country often doesn’t work. If you want to be successful, you have to do what works in your country.

When looking at investing in Italy, I’d consider short-term rentals only but best in mind I’m a foreigner.

@Amanda Restom just sent you a direct message.

@KC Frank

Sounds like it'll be for a large part a lifestyle purchase, which makes it easier. However, when it comes to cash flow and appreciation, there's something important to understand. In such a vacation market, cash flow and long term value oftentimes go hand in hand. It's not like in the US where you have the cash-flowing low appreciation Mid Western-style and the negative cash flow high appreciation Californian-style market. If there's no cash flow, there's not much long-term property value increase because very few of the kind of properties that you'd buy are primary homes and therefore they don't have that intrinsic value. This is especially true in a resort, in which no home would probably ever be a primary home. So, the long-term value is closely tied to the cash-flow potential.

When it comes to the whole area, that ship has sailed in my opinion. Of course, I don't know what your time horizon is. The long term price trajectory will partly depend on whether the sargassum issue can be contained or whether it gets worse and on how much overbuilding eventually takes place.

If you want to be in a resort, the resort is more important than the location in my opinion. Most people won't care if it takes 10 minutes longer to go to a resort if it is better. I tend to put my mouth where my money is so, if you don't want to be in a resort, I'd go for Playa del Carmen, which is easy access from the airport.

Something important to understand is that your guests (and yourself) typically will have to pay to use the resort facilities. If they want to use the resort more than once or twice during their stay, it's probably gonna be cheaper for them to take the all-inclusive package. In theory, this could work if the resort is for example close to Playa del Carmen, your guests want to use it once or twice and go to town the rest of the town. Problem is I'm not sure how many people would do that since you typically have the resort lovers and the resort haters and people who want to enjoy Playa del Carmen typically want to be downtown and take advantage of the walkability. So, if I was to buy in a resort, I'd want proven cash flow at the very minimum.

@KC Frank

Sounds that this kind of opportunities would work for your lifestyle but make sure you understand how much money you're going to make and what the rules are, as it might be way less than you think and also there are rules attached to your investment that are outside of your control. I've been investing in the area for years and always avoided them like the plague.

Also, if it was me, I'd put my cash in a more profitable investment and stay at an all-inclusive resort "for free" using the profits of that more profitable investment. These resorts are cheap so I rather be the renter than the owner. Moroever, it'd be better from a lifestyle point of view as I can stay in a different one each time and so it would be way more exciting ans less boring.

Hi Lexi,

Houses are mind-blowing cheap in Detroit compared to Miami. Yet, Miami has been by far the better investment. The question is also how much rental income you're going to be able to make. In Punta Cana, you'll have tho contend with the fact that most visitors want to stay in all-inclusive resorts and you can't compete against that while, in Tulum, you might have to contend with overbuilding of epic proportions and the ensuing competition. My advice to you: use Airdna to try to estimate future profitability. You might be in for a surprise.

@Sebastian Papworth the Dominican Republic offer some limited tax incentives but they are specific to some properties and you do have to pay taxes there. I don't know who you talked to but realtors in the Dominican Republic are unlicensed and unregulated so everybody and their mother can become one and they do. There are some good and professional realtors there but take what you're told by them at face value at your own peril. Moreover, even if it was true, foreigners have to pay taxes in their own country anyway so that would be irrelevant.

 @Jarrett Fogelman

Self-promotion is rightfully not allowed on the forum and so I don't want to write anything that potentially could be interpreted as such. I therefore answered your question by direct message.

@Jarrett Fogelman

The answer will depend on the rational behind your unwillingness to but a property just by yourself.

If you just want to spread the risks, you can invest through these crowdfunding platforms. Alternatively, you could buy a property with other people (you know or don't) under a fractional ownership structure or you and fellow investors could set up a partnership, which would buy and hold the property.

If you don't want to get involved, you can be a passive investor and invest in the deals of active investors. For example, I invest internationally and most investors don't have the time, knowledge resources or willingness to do it by themselves and therefore some of them invest in my deals. Plenty of investors do the same thing in the US.