Real Estate in the DR

Maxster said:

Advice needed for investment in RE.

I have about 30% of my profolio funds in the DR because of previous decent US$ interest rates - which currently is coming down (BHD currently paying 5.5% as of Nov). Also with all the financial things happening I am thinking of moving most of the funds into real estate. I just visit SD and noticed all the for sale signs! Since everyone is selling it is most likely a good time to buy.

I am not very familiar with the DR but have trusted interest bearing CDs from BHD because I have family that live in SD that recommended it a few years earlier - however they do not know much about RE.

Questions I have :

1. Which area of real estate do you recommend to provide cash flow? Tourist rentals? Commercial Plaza? Rental to Dominicians? Which area of country? If you can provide some info to those points with your experiences it would be helpful. The goal would be to earn at least 10% roi from cash flow - and hopefully capital gains years down the road.

2. How has the peso affected real estate pricing? Since the peso devalued - did real estate prices devalued the same % relative to US$ - if it is not the same % what effect on RE prices if the peso goes to 100 to 1?

3. It would appear that a tourist rental may be easiest - those of you that have one how are you managing the property - marketing, handling the stay, keys, cleanup, etc - I am only in the DR 4 or 5 times a year.

Thank you.

Maxster

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#1 depends on the amount of participation you want to take, how much money you are putting into this, if you are considering leveraging and more. Hard to give advice.

#2 Most stuff is really priced in Dollars that I have seen. It hasn't gone down because of the Peso but because of the economy in the last many years. I am hoping for buying now at close to the bottom but my chrystal ball broke a few years ago and it is all a guess. Historically the best time to buy is when things look the worse and make stupid low offers until something falls.

#3 I mostly manage the little I do myself with the help of friends but 99% by myself. I have a deal with a friend that picks up my people from the Airport and the Vacation Renters pay him 25$ US for Roundtrip which is a bargain. He has a restaurant in town and makes a customer out of them while picking up a few extra bucks and checking them in for me. Check out my website to see what exactly I have done and am doing. Maybe you can pick up an idea or two.

After you take a look I would be happy to discuss numbers with you so you get a better picture. I would be happy to share my info. More than enough room for everyone.

http://www.dominicancondorental.com

Regards,
Scott

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Am an experienced realtor. I work all over the Dominican Republic. I've sent you an email on the subject.

mtt
mtejadatapia@yahoo.com

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Maxster, the hucksters are coming out of the woodwork looking for your money.

I would suggest your best investment in real estate right now is in the east, the Punta Cana / Bavaro area. Speculation is advantageous there because of access to high tourist traffic/dollars entering the market, plenty of land, uninterrupted electrical power supply, nearby Punta Cana airport, and the area is fairly insulated from the civil unrest. Prime real estate prices have remained fairly consistant, although inching up very slowly, and are usually quoted in dollars per sq.m.

Tourist rentals are better investment because they will pay in dollars, tend to be cleaner, and will treat property with more respect. The disadvantage is if you have a dispute, they have left the country, Good Luck!

A commercial plaza is a bigger investment; greater risk because high overhead costs, legal/illegal, and turnover of tenents-here today gone tomorrow. The advantage of a commercial plaza is you can skim a percentage of the tenents profits, provided you know what they are earning.

Rental to Dominicans is risky, they have earned a bad reputation because: they are always "honest", pay in pesos, always want a discount off the published rate even if you have already discounted, do not want to pay, will not take care of the property, furnishings and accessories end up missing during and after a stay. If they say there is party of four in their group rental it does not include the other 20-40 family members and friends who will visit often and as a whole group causing more wear and tear on your property. You have to clean and repair more often. The additional disadvantage is if you have a dispute and they are in the country, Good Luck! Regards, PJT

If you want $$$$ in the NOW a vacation rental is best in ANY tourist area.......... Sosua/PP/Cabarete probably best as it is an established market. Punta Cana/Bavaro has good future potential, but is still developing.....................