Rental Income - Realistic Info & Specifics Wanted

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Kevin&Julie

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Apr 23, 2008
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We are thinking of buying a condo within the next 2 years, in the Sosua/Cabarete area. We have searched this site and found a LOT of great info, but nothing specific regarding numbers and are hoping those with experience can help us out.
1 - How many weeks per year (on average) can we realistically expect that our condo will be rented?
2 - How much money do you actually make on a weekly rental? (i.e. the condo corporation takes a cut, 30% taxes ... how much of your rental fee should you expect to actually get in the bank?)
3 - Do the condo fees usually include insurance or is that extra (and if so, how crazy expensive is it to ensure a condo on a Caribbean island that has the risk of being destroyed by a hurricane every year?!?)

We will be paying cash for the condo we buy, but obviously there will be monthly fees and we are hoping that renting it out will at least cover these. We are not looking to make a fortune off rentals, but also don't want to be paying money into it for it to sit empty! Is it realistic to expect that at the very least, our monthly bills will be covered by the rental income we make?

Sorry this is so long, but we want to make sure we really know what we're getting ourselves into!! Everyone on this site seems so friendly and nice, it seems like the best place to come for help :) Thanks in advance!
 
Robert

Robert

Stay Frosty!
Jan 2, 1999
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dr1.com
I know some people that do well, others that are struggling.

From what I see, it comes down to your ability to market the property and of course what type of service you provide.

I have a friend that tells me his US$1,200 a night Sea Horse villa is hardly renting and another that has a US$2,500 a night villa in Cabrera that is always booked. Is it a change in market conditions or the difference is their ability to market the property? From what I see, it's the difference in their ability to market.

We have clients on DR1 that derive 75%+ of all their rental bookings from DR1. Just ask Judy at Las Canas how she did this Christmas season or some of those that own at the Palms.

http://www.dr1.com/forums/real-esta...ld-know-before-investing-rental-property.html

When you next in Sosua, send Curt Erickson that looks after real estate for DR1 an email. I'm sure he will be happy to introduce you to a bunch of current villa owners that can give you the low down, the good and the bad.

Email: curt@dr1.com
 
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planner

.............. ?
Sep 23, 2002
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You also need to look at the rules of the project you are purchasing in. Some force you to rental pool with them. Others give you options. If you have to rental pool with them then you are somewhat restricted in what you can do yourself. Make sure you know the rules.

Make sure you understand about the insurance - most times it is not included. Don't worry too much about Hurricanes, they are very rare on the north coast.

And some properties will be easier to rent out then others. Some are more in demand. It will depend on the size of the condo, amenities, location, time of year etc to determine what rental you can get.

Robert is correct - marketing will make all the difference. They do a good job on this site!
 
J D Sauser

J D Sauser

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Nov 20, 2004
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www.hispanosuizainvest.com
Since I don't now what property(ies) you are contemplating if any at all yet, let me share with you a generic array of concerns you may need to evaluate:
I think that some of the questions you will need to ask yourself may include:
  • Location / price ratio. And there you need to calculate based on what ya can find realistically. This does not just go to the purchase price but obviously to a realistic attractive rental price. Don't let yourself be fooled by what others ASK here, whether it is selling or rental prices, but try to find out what HAS indeed been SOLD and to how much it really did and the same goes to rentals. Check out the places in a similar location that ARE rented out and how much they rake in. As you may already have seen, most EVERYTHING is for SALE here. But most are just kites flying... very high... based on what the guy next door or down the road is ASKING also... then you find out that all they've been doing, was that... for years! Finally it is easier to do business if you manage to buy way under the price so you can also rent lower than most.
  • How are you going to let the world know you are renting. Certainly, some agents (many of them actually SELL places) will try to list your rental... for a hefty commission... and rightfully so... at the end, one or two monthly rents as a commission is not all that much for showing a place to several people plus the cost of advertising and so forth. But in your calculation, losing 10 or 20% or your rental income may be part of what could turn a potential winning business into a loosing one. An other way can be for you to advertise here, and in other public places. I know people who have been very successful at that and others who have done no business while choosing that route. May God forbid you fall victim of one of the guys that will rent the place and not tell you about it, until one day you show up by surprise and find your empty place full of people which will not give you a warm welcome... a not untypical scheme, we've had the questionable privilege to read about several times here on this very Forum.
  • Who will handle your lessees? Pick them up, handle deposits and so forth and attend to their problems and issues with the property? How much will that chip off your gross incomes. And can you trust them.
  • How about repairs? Most likely, the person or company who handles the leases will just call some "technician" to "fix" the problem and hand over the bill to you... discounting it from any income you had or have... maybe even taking a "small" commission on the way form the "technician"(?). Who is to say you are not paying for repairs and maintenance that was not necessary.
All in all, most absentee landlords, not just in this country are the ones that will more or less soon but eventually try to sell you their super income generating property... why? because, while it CAN be done and profitably, as you will understand from all the above, it is NOT that easy a business.
Most of the landlords which do well here, are locally present and able to handle most aspects of their BUSINESS (because that's what it is, a business!) themselves! They can also handle many minor repairs themselves and know who to call if they happen to have a tenant who suddenly decides that paying rent is not part of his newly discovered Caribbean life style anymore.
Most of those I know to get excellent returns on their investments and ongoing costs, have built for rent or just waited living here until they could pick up here and there a property for very little money.

I hope not to have shattered your dreams and interest in this country's Real Estate opportunities, because there are plenty... but it's a business that needs to be approached very critically, IMHO.

... J-D.
 
K

Kevin&Julie

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Apr 23, 2008
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No JD, you have not shattered our dreams, we appreciate all advice from people who know more about these things than us ;)

I hope that you don't mean that all of the condo managements are corrupt though ... surely there must be some out there that you can trust to handle a few things for you?? IE even if we do our own marketing and get our own renters, would we not still need them to handle the check-in, etc when the renters arrive? At some point you need to trust somebody to get the little details done????

Like we said originally, we are not looking to make a huge profit from owning this condo, we would just like to break even for a few years until we have more time to spend there ourselves ... maybe in 10 years sell it for more than we paid in order to get a more private place to "semi retire" to ... keep in mind we are quite young (late 20's) so this is hopefully the first step in a long term plan of early retirement!!!
 
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roks33

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Jan 21, 2007
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Yes you can find locals who are not corrupt or steeling, the only thing is how to find them and how to keep them satisfied.
Yes you can find condos/houses and almost for sure the price increases in 10 years.
My experience is if you do the rental/payment yourself when everything is ok in the DR:
First year 10 weeks rental
Second year 12-15 weeks
Third-Fifth year 15-20 weeks
After the fifth year when you don't change anything, so the local who picks up the people and show them the condo, the same lady for cleaning etc. etc. it will be fully booked.
 
K

KeithF

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Jul 9, 2006
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roks33 said:
First year 10 weeks rental
Second year 12-15 weeks
Third-Fifth year 15-20 weeks
Click to expand...

I've done pretty much what you guys are suggesting. I've bought a condo in Cabarete instead of a pension in the UK.

Managing from a distances is not easy and the figures roks quoted are broadly in line with my projection. 10 weeks rental will break even for condo fees, electric etc but zero return on investment. But the value of the condo in the long term, I'm sure will be excellent. So breaking even is okay for me. In fact, even a slight loss is okay for a couple of years because that is what I'd be paying in to a pension plan anyway. I'm hoping for a positive return from rentals from year three, once I have a core of 'return' guests.

My main piece of advice is not to push yourself so far that you MUST have rental income to keep afloat. If you lived in DR you may be able to manage that but from a distance especially, I'd say that rental income is a bonus. If you can afford to have it empty, then you have a safe place to build from.
 
A

AK74

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Jun 18, 2007
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KeithF said:
I've done pretty much what you guys are suggesting. I've bought a condo in Cabarete instead of a pension in the UK.

Managing from a distances is not easy and the figures roks quoted are broadly in line with my projection. 10 weeks rental will break even for condo fees, electric etc but zero return on investment. But the value of the condo in the long term, I'm sure will be excellent. So breaking even is okay for me. In fact, even a slight loss is okay for a couple of years because that is what I'd be paying in to a pension plan anyway. I'm hoping for a positive return from rentals from year three, once I have a core of 'return' guests.

My main piece of advice is not to push yourself so far that you MUST have rental income to keep afloat. If you lived in DR you may be able to manage that but from a distance especially, I'd say that rental income is a bonus. If you can afford to have it empty, then you have a safe place to build from.
Click to expand...


Just very politely - how old are you? So that you speak with this much confidence about your returns in three-four-etc years ahead. Can you at least guarantee that you will live that much?

The reason for the question was my talk two days ago with a almost 80 y.o. american expat who still talks about short-term, mid-term and LONG-TERM investments.

I love those guys! Untill their last breath they keep talking only about making more and more and more money. Even women!
Beautiful!
 
J

John Evans

Guest
there are more and more people reaching the over 100 bracket these days so thats at least another 20yrs - look on the bright side
 
cobraboy

cobraboy

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Jul 24, 2004
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If you have to have rental income to afford to buy it, you really cannot afford it.

Absentee landlordism is nearly always guaranteed to bring some significant drama and financial heartburn sooner or later.
 
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drloca

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Oct 26, 2004
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AK74 said:
Just very politely - how old are you? So that you speak with this much confidence about your returns in three-four-etc years ahead. Can you at least guarantee that you will live that much?

The reason for the question was my talk two days ago with a almost 80 y.o. american expat who still talks about short-term, mid-term and LONG-TERM investments.

I love those guys! Untill their last breath they keep talking only about making more and more and more money. Even women!
Beautiful!
Click to expand...

Last I checked only the good Lord knows how long each of us mere mortals has on this beautiful earth.
 
K

KeithF

New member
Jul 9, 2006
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www.cabarete.org
AK74 said:
Just very politely - how old are you? So that you speak with this much confidence about your returns in three-four-etc years ahead. Can you at least guarantee that you will live that much?

The reason for the question was my talk two days ago with a almost 80 y.o. american expat who still talks about short-term, mid-term and LONG-TERM investments.

I love those guys! Untill their last breath they keep talking only about making more and more and more money. Even women!
Beautiful!
Click to expand...

Well, as you asked politely, I'm 42 yrs old, so I'm hoping that it's worth my while talking of along term investment! As I mentioned earlier in the thread, this is being bought instead of a pension. I've swapped jobs a few times, so my pension provision is poor. I'm now at a stage where I either stick loads of cash into a pension to play 'catch up', work till I drop to get by on what I have in place or do something else. With pension plans looking increasingly dodgy, I decided that property was the best way forwards, so what I pay out monthly is what I'd have to stick away anyway. And if it screws up, it does so because I've made bad choices. If a pension plan screws up, it's because other people made bad choices for me.

Besides, the experience of buying in DR has been worthwhile, even when it's been tough.
 
A

AK74

On Vacation!
Jun 18, 2007
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KeithF said:
Well, as you asked politely, I'm 42 yrs old, so I'm hoping that it's worth my while talking of along term investment! As I mentioned earlier in the thread, this is being bought instead of a pension. I've swapped jobs a few times, so my pension provision is poor. I'm now at a stage where I either stick loads of cash into a pension to play 'catch up', work till I drop to get by on what I have in place or do something else. With pension plans looking increasingly dodgy, I decided that property was the best way forwards, so what I pay out monthly is what I'd have to stick away anyway. And if it screws up, it does so because I've made bad choices. If a pension plan screws up, it's because other people made bad choices for me.

Besides, the experience of buying in DR has been worthwhile, even when it's been tough.
Click to expand...

First of all, thank you for not being offended with my very innocent and respectful question, like some more paranoidal DR1 members would be!

Of course 42 is a great prime time to invest in RE in any country as due to young age you will be able to survive any possible market ups and downs without major stress.

However I am truly shocked to see sometimes 60+ y. olders passionately and emotionally discussing "investments" instead of trying to make their last and best 7-10 sunset years as much comfortable, luxurious, sexfull and stress and worry free as possible.

Looks like nobody ever teached them to LIVE. Peacefully, creatively and spiritually.
 
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