Is there hope for Cabarete? (Investing in Property)

[oceanspear]

I would stay away from restaurants period, you are basically buying yourself into slavery. AGAIN, I dont think that anybody wanting to do business in DR comes here for big profits, I believe they want a different lifestyle. In my humble opinion a great business in any country is 1- Mobile business not relying on a permanent location (high rents). 2-No long term employees 3- Mostly if not all cash business/ Paypal, secure transactions. I know of one or 2 ways to make decent coin in this country if you do it right and have a great attorney. Stay away from the hospitality industry. I with a friend will start a "lifestyle business" but my main income will not depend from that venture. It will be icing on the cake.
what you do for fun or love usually does not make you money. what is usually hard, time consuming and requires attention and smarts is where the money is at.
I will volunteer one business idea not for the faint of heart and only those who have been here for a while can do. big profits if you are careful: Hard Money Lending. if you got a great lawyer there is tons of money to be made, and if you only deal with decent people. there you have it.
2- Doing business with Haiti. same rules apply.
3- Specialty express auto/ aviation parts express. more knowledge of the industry required.
4- Custom looking, cheap (compared to Harleys) motorbikes.
5- the last idea I will keep to myself since I'm thinking about doing it.

 

[drstock]

I run a small business in my semi-retirement here in Cabarete. It doesn't make much money, just enough for me to live on, with some help from overseas investments, but then I don't work very hard. If I wanted to work harder, I could earn more. If you have a good business model and are prepared to work hard, you can earn money, but that's IF you have a good business model. I have seen many shops, bars and restaurants open and close again quickly, as there is a LOT of competition. Don't expect to get rich and you won't be disappointed, and if, like me, you enjoy Cabarete life, you can be happy!

 

[Dark_Scorpion]

I am interested in finding out the word on the street as to the future of Cabarete as a tourist destination. I am aware the North Coast has been hurting in recent years, many hotels closing, etc. This seems to have resulted in many smaller boutique hotels, apartment building, etc. coming up for sale at very decent prices. As a person looking for something to invest in and run as a retirement business, would it be insane to even think of buying one of these properties? I appreciate the advice of those who are living there.

If I were you, I would think twice before investing a lot of money in the DR. Do you intend to deal with locals, or other expats? If you're going to deal with locals, then they have a business culture that is distinct from North America or Europe. Without connections or charms it is tough dealing with them. With the economic crisis in Europe and NA, you also have to consider how well the tourism industry here will do in coming years. If the economy of America and Europe continues to slide, tourism will plummet in the DR and instability may rear its head in this country. I've thought about investing in real estate here but I'm beginning to change my mind. Finally, any property you own in the DR is yours so long as the Dominican government allows you to hold it. If they decide to seize it Venezuelan style there will be nothing you can do. If I were you I would not put any significant eggs in the DR.

 

[Dark_Scorpion]

I run a small business in my semi-retirement here in Cabarete. It doesn't make much money, just enough for me to live on, with some help from overseas investments, but then I don't work very hard. If I wanted to work harder, I could earn more. If you have a good business model and are prepared to work hard, you can earn money, but that's IF you have a good business model. I have seen many shops, bars and restaurants open and close again quickly, as there is a LOT of competition. Don't expect to get rich and you won't be disappointed, and if, like me, you enjoy Cabarete life, you can be happy!

This post is hilarious. So let me get this straight, it is okay to open a business in the DR......so long as you don't expect to get rich!? ROFL! Man, that was a good one! Isn't that why most people go into business in the first place? You sound like a Dominican lol, you run a business just to get by rather than to become rich, ha! Me, I'm a little bit more ambitious than that.

 

[Dark_Scorpion]

So, Harleysrock, are you just living on investment/retirement income or do you work in the DR? There must be some expats there that are not independently wealthy and have to do something for an income, aren't there?

You older guys are doing things the old fashioned way. Yes, I'm a very young expat who lives in the DR, but I depend little on this country for my source of income. Any expat that depends on the DR for their source of income is making a BIG MISTAKE. The DR has a history of instability. The people are dirt poor. The country generates the majority of its revenue from foreign tourists, and when they are no longer able to come down due to economic problems in their country, this creates a domino effect, because then local Dominican businesses suffer, and crime can increase. Do you people really want to invest in a country like that?

I make my money through cyberspace. I don't depend on a job in the DR, and I certainly don't depend on the tourism sector, which is flakly at best. The DR has to compete with a bunch of other Caribbean islands, and its close proximity to Haiti hasn't helped. When I first moved to the DR, I was thinking of buying condos to rent out, but my mind is slowly changing. If I were a Canadian with a lot of money, I would probably buy a business in Canada, one that is already generating a lot of cash, then hire someone to run it, pay them well, then move down to the DR and then get the earnings from the business wired to me here. My advice to expats is don't depend on the DR as a source of income. The country is way too unstable and poor for that. Depend on sources of income which are external to this country.

 

[Dark_Scorpion]

btw 9 out 10 business in the USA go bust within the first 3-5 years...so just because a fool has money to open a business does not translate into being succesful running one.
just my 2 cents.

Yeah............but, the difference between the USA and the DR is that it is far easier to do business in the USA. The other day, I was reading the World Bank's Ease of Doing Business Index, which rates countries based on their ease of doing business. The scale is from 1 to 181, with 1 being the easiest country to do business in, and 181 being the hardest. Guess where the DR ranks? 116 out of 181. Guess where the USA is? Number 4. Here is the stats below:

Ranking of economies - Doing Business - World Bank Group

The DR is not a business friendly country. This is one reason why the people are so poor, and this fact is backed up by statistics and numerous info I've read on the subject. I would not depend on the DR as a source of income. This country relies on tourism and agriculture, two factors over which Dominicans have very little control. Tourism is dependent on the desire and ability of foreigners to come here, and agriculture is largely dependent on the weather. The DR is also heavily exploited by foreign corporations much like African countries, the Gold Barrick Mine being a great example. The only real advantage I see to the DR finance wise is the 40 to 1 ratio of the Dollar versus Peso. Other than that I can't recommend the DR as a solid long term investment.

 

[Dark_Scorpion]

I will volunteer one business idea not for the faint of heart and only those who have been here for a while can do. big profits if you are careful: Hard Money Lending. if you got a great lawyer there is tons of money to be made, and if you only deal with decent people. there you have it.
2- Doing business with Haiti. same rules apply.
3- Specialty express auto/ aviation parts express. more knowledge of the industry required.
4- Custom looking, cheap (compared to Harleys) motorbikes.
5- the last idea I will keep to myself since I'm thinking about doing it.

I've thought of doing hard money lending in the DR to......not a bad idea. However, there are a lot of things to consider. When dealing with locals you'd better sleep with one eye open. Forget the lawyer, I wouldn't loan a dime without collateral, physical collateral in my possession until the loan is repaid. Hiring a lawyer in the DR if you get into a payment dispute is timely and costly, whereas if you have collateral you simply keep it until the bastard repays your money. I've tried hard money lending back in the USA and I got burned badly......and I took the guy to court. I didn't get my money back and that was in the USA........so how easy do you think it will be to get justice in the DR?

Also, your Spanish had better be really good if you get into that line of business. My Spanish is not on the level where I could do stuff like that, I can speak, read and write Spanish but have a hard time understanding the locals with their fast talking and Dominican dialect. But yeah, your plan sounds great with the exception of the Dominican lawyer, forget it. Play in smarter and get secured loans with collateral. Anything valuable can be used as collateral, some people even use wine as collateral. If it has value and can be resold, then it can be used to secure the loan.

 

[dv8]

like everywhere in the world there are also plenty of opportunities in DR to make lots of money. all you need is a great idea, great timing and money to start. at least two of the three. the biggest and best dominican businesses started small. la sirena started from one shop. metro from few buses and few routes. there was money to start the thing, there was a good idea and the timing was perfect.
private hospitals are making money. private insurance companies are making money. car dealerships are making money. rice and coffee makers are making money.

personally i am not keen on on this own business s**t. miesposo had a business and all it did was to eat all of our time. you cannot go on holidays because business. you have to cover for sick workers. you have to bend your arse backwards to do paperwork, taxes and whatnot. your workers are trying to screw you. darn. what do i need all that for? it's much better to be an employee. more opportunities to be lazy...

more on cabarete, thou. i think it did grow a lot since i have arrived to DR 7 years ago. it is way bigger and better that it was. more businesses, more people, more developments. it is a great place. but does it offer anything in terms of investment? probably not so much anymore. someone already said here that good prices time for cabarete is long gone. some time ago you could have bought a piece of oceanfront property and you'd sell it for a nice profit today. but i am pretty much sure that the prices for the same piece of land today are too elevated...

 

[windeguy]

I think this is one of the better threads with more good advice than I have seen in a while here on DR1. Keep it up.

I go agree that if you come up with a good business model, be very careful of how easy it is to copy it. That happens here all of the time. As for Cabarete- Please open a Trader Joe's.

 

[Dark_Scorpion]

like everywhere in the world there are also plenty of opportunities in DR to make lots of money. all you need is a great idea, great timing and money to start. at least two of the three. the biggest and best dominican businesses started small. la sirena started from one shop. metro from few buses and few routes. there was money to start the thing, there was a good idea and the timing was perfect.
private hospitals are making money. private insurance companies are making money. car dealerships are making money. rice and coffee makers are making money.

personally i am not keen on on this own business s**t. miesposo had a business and all it did was to eat all of our time. you cannot go on holidays because business. you have to cover for sick workers. you have to bend your arse backwards to do paperwork, taxes and whatnot. your workers are trying to screw you. darn. what do i need all that for? it's much better to be an employee. more opportunities to be lazy...

more on cabarete, thou. i think it did grow a lot since i have arrived to DR 7 years ago. it is way bigger and better that it was. more businesses, more people, more developments. it is a great place. but does it offer anything in terms of investment? probably not so much anymore. someone already said here that good prices time for cabarete is long gone. some time ago you could have bought a piece of oceanfront property and you'd sell it for a nice profit today. but i am pretty much sure that the prices for the same piece of land today are too elevated...

It isn't that simple DV8. It isn't enough to have "great timing, a great idea and money" in the DR. That works more in the USA or New Zealand, nations which are business friendly. As I stated previously, the DR ranks very poorly on the "Ease of Doing Business Index," it ranks 116 out of 181. That means it is very difficult to successfully do business here. The locals also have a mentality which is NOT conducive to running a successful business. For one, connections and charm are more important in the DR than having a great idea or timing. You could be the next Steve Jobs and it wouldn't matter, if you have no connections in this country, or the ability to charm, your idea will go nowhere.

Even the internet service here is crap. Do you know how many times my Internet connection drops in a single day here? The ISP here in the DR is the worse I've ever seen, the Internet sometimes drops over a dozen times a day. You know why the Internet here is so crappy? It is because the ISP which services the DR didn't get their contract due to skill, efficiency, or good customer service. They got the contract due to connections and cronyism, and this is what results, crappy service. There are not a lot of choices for ISPs in the DR. The ISPs know this which is why the service is crap. The Internet services in the DR are like a oligopoly, a handful of providers carve up the island for themselves. Same thing with the power companies. Dominicans have a business culture and mentality that is not geared towards the type of merit based business success that you see in the USA. You could be a genius in the DR with a revolutionary idea, but without the right connections you won't get your foot in the door.

 

[Dark_Scorpion]

I think this is one of the better threads with more good advice than I have seen in a while here on DR1. Keep it up.

I go agree that if you come up with a good business model, be very careful of how easy it is to copy it. That happens here all of the time. As for Cabarete- Please open a Trader Joe's.

The Dominican Republic is a great country to come to after you've already amassed wealth. I'm not saying you have to be a millionaire before moving here, but I wouldn't move to the DR unless I have five figures at the bare minimum, and I"m talking about the higher five figures, not the lower end. And you're still going to need a source of income, which I recommend be external to this country. I enjoy living here, but from what I've seen so far since I've been here, the DR is a gamble. I'm reading the history of this country and it is really an eye opener.

At best, I would buy a house to live in here, but I'm beginning to question that, and here is why: here in the DR, you often have to pay 50 percent of the price of the house or more. Why sink a bunch of money into real estate that won't provide cash flow, when you could use that same cash to buy a business back in the USA or Canada that is already providing cash flow? Say for example, you want to buy a villa here in the DR, and it costs $200,000. You have $100,000 in cash. Why buy that villa when you can use that same $100,000 as a down payment toward an apartment complex in Canada or the USA which is generating $3,000 to $4,000 per month in passive income? If you invest that $100,000 in an apartment in CA or the USA, guess what? You can hire a property manager to collect the rents and manage the tenants, while you can move down to the DR and take advantage of the favorable currency exchange, see what I'm saying?

 

[PeterInBrat]

Agreed that for most folks Scorpion it's best to come down with a nest egg, though there are some of us who don't need to live a high end lifestyle as ex-pats. I was living on about $1000/month in Sosua about 5 years ago and living large by Dominican standards. That was for a small condo at Trade Winds for $400/month(all incl.) and then a budget of $20/day for food/transport and other expenses and eating out one meal a day. A retired married couple is going to want more.

That being said, when I eventually settle for good in the DR, I'm hoping to have a six figure nest egg and a modest Soc Security income.

 

[windeguy]

DS. Likewise - I never recommend to anyone who is not already in a position to retire to try and come here and make a living. There are just too many wide eyed "I wanna beach bar types" who think they can make it that get eaten alive. If you do come with a business and "make it big", somebody is very likely to copy your idea and then none of you make money.

 

[webgurutoo]

I'm a businessman in the US Windeguy.....you know what you're talking about....Super advice!

 

[Dark_Scorpion]

DS. Likewise - I never recommend to anyone who is not already in a position to retire to try and come here and make a living. There are just too many wide eyed "I wanna beach bar types" who think they can make it that get eaten alive. If you do come with a business and "make it big", somebody is very likely to copy your idea and then none of you make money.

The Internet has leveled the playing field a lot. With a laptop, an internet connection, and the right skills, you can make money while living in the DR or anywhere in the world. There are a number of ways I can make money doing freelance jobs on the web, I'm just kind of tired of that stuff and looking to go in a new direction. One example is programming. If you happen to have programming knowledge in a language that is high in demand, you could freelance over the Internet and make a lot of money while living in the DR. You can program from anywhere in the world. I've hired programmers in India to do jobs for me, and we did everything via Skype.

The Internet service here in the DR is crap, but I'm thankful to have it. Without the Internet I could not live in the DR, or I could, but it would be much more difficult. You older guys, the baby boomers, who have big nest eggs have it made. If I were you, I would consider buying an apartment complex or business in the USA or Canada that is already making money every month, then move here to the DR and collect the checks every month. I talked to a property manager back in the USA and they said they manage properties for their clients for 8% of the monthly cash flow. That means they handle the tenants, collect the rents, evict, do repairs, etc. I think with a property manager you can own rental property in the USA but live as an expat in the DR. You would need to keep regular contact with the property manager, and you would need to make sure they're honest and good to the tenants, but it is doable. But the bar scene here in the DR as a business? No way, that is way to risky and unreliable. When I rented my apartment in the USA, I never met the owners of the complex. I always dealt with the property manager, that is who I paid my rent to, that is who I called for repairs. For all I knew, the owners of that apartment could have lived in Thailand or the Caribbean, and I would never know. The DR is great because you can enjoy a higher standard of living here due to the exchange rate between the peso and Euro, Dollar, CAD, etc. That and the country's relative stability compared to other Latin American nations. But the DR's stability can change overnight, and the history teaches us that.

 

[webgurutoo]

Scorpion-

It's a Capital At Risk factor. If you put 100K down on a 200K home. You're total Capital at Risk is only 200K and formal debt service risk of 100K. If you can successfully rent it on a regular basis at an appropriate rate...That's fine. They own the home, making a modest income/mortgage payment and it can work. If you are looking for serious income. I agree with you. It is not a great idea to come to a poor country and try and find a gold mine of a business. That's simply not how it works without doing a multi million dollar operation....even then it's risky.

Windeguy-

I've travel all over the world and meet expats all the time who have their dream ego trip of owning a beach bar and living the high life in a third world. I own a successful restaurant in the US and these people are in dream land.

 

[webgurutoo]

From an economic standpoint, I think things will get much worse when the financial collapse occurs in the US soon. As Bernanke keeps printing 85 billion a month in new money with no new serious job growth to show for it, we are screwed. It's mathematically inevitable, we are pretty much headed for financial collapse soon. When that happens, the DR and everyone else will definitely feel the shock wave. The worst the DR will likely see is much higher gas prices and alot of resorts in Punta Cana getting hammered financially.

High Speed Internet access sucks in the DR?? That could throw a wrench into my plans to move there. Any thoughts on that. i am scoping out around Sosua.

 

[Dark_Scorpion]

Scorpion-

It's a Capital At Risk factor. If you put 100K down on a 200K home. You're total Capital at Risk is only 200K and formal debt service risk of 100K. If you can successfully rent it on a regular basis at an appropriate rate...That's fine. They own the home, making a modest income/mortgage payment and it can work. If you are looking for serious income. I agree with you. It is not a great idea to come to a poor country and try and find a gold mine of a business. That's simply not how it works without doing a multi million dollar operation....even then it's risky.

Windeguy-

I've travel all over the world and meet expats all the time who have their dream ego trip of owning a beach bar and living the high life in a third world. I own a successful restaurant in the US and these people are in dream land.

There is something else that I forgot to mention. Right now, the DR is one of the top tourist destinations in the Caribbean, but what happens when/if Cuba gets its act together? It isn't going to be long before Fidel goes the way of Chavez, the man has been in power since the 1950s. Cuba is much much larger than the DR and has far more potential. I believe that if Cubans get their act together, Cuba can become the number one tourist destination in the Caribbean, leaving the DR in the dust. I think the DR is already second to Puerto Rico, so a revitalized Cuba could possibly push the DR into third place.

This is another reason why I would think twice about depending on tourism related businesses in the DR. Tourism is extremely shaky. Remember that earthquake that hit Haiti a few years bacK? That was on the other side of the island, it could have hit here in the DR? How well would the bars, hotels, etc in the DR do if this country got hit by a massive 7.0 earthquake? It would take months to repair the damage, and the death toll would be huge. Tourists would be scared to come here, and any business that depends on tourism could seen its income potentially flat line for months. You own a restaurant in the USA? You're smart. I'd own one there before the DR, thats for sure. The USA may have some problems, but the country is still very wealthy fundamentally, and if it gets its act together it can regain its prosperity.

 

[windeguy]

I had my taste of absentee land lording when my second wife decided to keep an apartment on the east coast when we moved to the west coast of the US. We had a good property manager and it was still a nightmare cause by a bad tenant. I ended up selling the condo and washing my hands of the absentee landlord/property manger idea. It may work for others who are more fortunate.

Agreed that Internet based businesses are good almost anywhere including here. We recently had a tenant who managed a gambling website based in Gibralter. Who new Gibralter was a major player in that industry? Others were FOREX traders, etc. I myself was a microprocessor design engineer with some minor experience in programming and that experience could have allowed for a possible job here if I needed it.

While the DR is a top tourist destination, those tourists are not being fed to the North Coast, but rather the AI businesses on the East Coast. Very little marketing and improvement is currently being done for the North Coast tourist industry. That is a fish the North Coast let get away due to neglect.

 

[PeterInBrat]

I've met web-page guys in the DR with clients all over the world. They find a corner in a quiet bar and write code all day while sucking down the occasional fria. Not the worst way to make a living. Still plenty of room for web-page designers, esp if you can speak Spanish and English, along with either German or French(Las Terranas).