Anybody have any guess as where the peso is going ?

johne

Silver
Jun 28, 2003
4,453
1,099
113
I'm writing a proposal for a rental property and the rent is payable in pesos. It is a long term contract and I am now at the point of putting some hard numbers in for years 2-5. (I am the renter. Commercial property) Your thoughts?
 
  • Like
Reactions: Yourmaninvegas
Jan 9, 2004
9,344
667
113
I'm writing a proposal for a rental property and the rent is payable in pesos. It is a long term contract and I am now at the point of putting some hard numbers in for years 2-5. (I am the renter. Commercial property) Your thoughts?
Typical contracts I have seen in the DR use a 10% escalator per year for contracts in pesos. No particular rhyme reason or justification, they just seem to want 10%.

Your best bet would be to hold any proposed increases to no more than 5% as the peso generally depreciates that amount annually....particularly if you will converting dollars to pesos to pay, the exception being last year when it lost 10% against the dollar.

Good luck.


Respectfully,
Playacaribe2
 
  • Like
Reactions: USA DOC

johne

Silver
Jun 28, 2003
4,453
1,099
113
Typical contracts I have seen in the DR use a 10% escalator per year for contracts in pesos. No particular rhyme reason or justification, they just seem to want 10%.

Your best bet would be to hold any proposed increases to no more than 5% as the peso generally depreciates that amount annually....particularly if you will converting dollars to pesos to pay, the exception being last year when it lost 10% against the dollar.

Good luck.


Respectfully,
Playacaribe2
So far she has not asked for an increase for the first five years. I'm going to say nothing and see if she catches it. I'm assuming (based on the debt load the RD is taking on and the lack of tourist tax income) the peso will fall against the dollar, not rise.
I'll know this week.
 
  • Like
Reactions: USA DOC

JD Jones

Moderator - Covid 19 in DR & North Coast
Jan 7, 2016
3,614
1,567
113
I can tell you the peso has been dropping since august of last year. Not by much, but definitely dropping.

Also, I have never rented without the owner agreeing to drop the 10% escalator. Food for thought.
 

johne

Silver
Jun 28, 2003
4,453
1,099
113
I can tell you the peso has been dropping since august of last year. Not by much, but definitely dropping.

Also, I have never rented without the owner agreeing to drop the 10% escalator. Food for thought.
JD You will be one of the first to know.
 

NanSanPedro

Nickel with tin plating
Apr 12, 2019
2,206
1,801
113
I can tell you the peso has been dropping since august of last year. Not by much, but definitely dropping.

Also, I have never rented without the owner agreeing to drop the 10% escalator. Food for thought.
It's in my contract. However the landlady waived it for next lease without me asking (which I was prepared to do). If you have a good tenant, it's best to not force their hand by raising the rent 10%.
 
  • Like
Reactions: drstock and Russell

johne

Silver
Jun 28, 2003
4,453
1,099
113
It's in my contract. However the landlady waived it for next lease without me asking (which I was prepared to do). If you have a good tenant, it's best to not force their hand by raising the rent 10%.
Correct. Or, if you have on the hook a person that's interested in your property that you have not been able to rent out for "quite some time".
 
  • Like
Reactions: Russell

Yourmaninvegas

I am here to protect and serve
Feb 16, 2016
1,141
424
83
-
My man johne,

I have had success in 1 year contracts in pesos.
They were better than the ones in dollars.
Because of the exchange rate.
And even had my rent lowered each year (in both dollars and pesos).
I simply used the threat of moving out each year and showed the management representative I had already found a less expensive apartment that I liked.
These were residential leases.
Yes, I know.
Not applicable to your situation.
But I just wanted to share my experience.
Hope you don't mind.

Very nice thread my man ‼️
 
Jan 9, 2004
9,344
667
113
So far she has not asked for an increase for the first five years. I'm going to say nothing and see if she catches it. I'm assuming (based on the debt load the RD is taking on and the lack of tourist tax income) the peso will fall against the dollar, not rise.
I'll know this week.
Not to many sure things in life...............but the peso trajectory since the early 1980's at 1:1 against the dollar............versus today's official rate at 57:1..............should tell you that even if you are wrong about the reason why it will decline...............passed history is that overall............it will decline nonetheless.

The only wildcard then is.............the rate at which it will decline yoy.


Respectfully,
Playacaribe2
 
  • Like
Reactions: Carl.L

korejdk_again

Newbie
Mar 26, 2019
19
3
3
One can suggest that you carry out the basic "average FX rate" for the past 10 years; DOP is loosely pegged to USD so once you figure out the yearly constant depreciation rate, use that to help you contemplate the next "hard numbers for 2-5 years"......I would kindly suggest to ignore the potential interest rate volatility or the neutral delta as appended variables since one could get confused or/and overwhelmed...For your reference - Feb 2011 37.XYZ => Feb 2021 58.XYX
Suerte!
 
Jan 9, 2004
9,344
667
113
One can suggest that you carry out the basic "average FX rate" for the past 10 years; DOP is loosely pegged to USD so once you figure out the yearly constant depreciation rate, use that to help you contemplate the next "hard numbers for 2-5 years"......I would kindly suggest to ignore the potential interest rate volatility or the neutral delta as appended variables since one could get confused or/and overwhelmed...For your reference - Feb 2011 37.XYZ => Feb 2021 58.XYX
Suerte!
That depreciation rate has been +/- 5% annually for the last ten years, 2020 being an outlier at 10%.

Any yearly increase at 5% or under is a benefit to the lessee. That is not the most important issue to deal with though.

Making sure there are no outstanding charges for utilities from the prior tenant or that the utilities even function................lest you receive that surprise and expense after the ink has dried on the contract.


Respectfully,
Playacaribe2
 

korejdk_again

Newbie
Mar 26, 2019
19
3
3
Making sure there are no outstanding charges for utilities from the prior tenant or that the utilities even function................lest you receive that surprise and expense after the ink has dried on the contract.


Respectfully,
Playacaribe2
For an expat contemplating a lease the above would be the first consideration - common sense hence no mention on my post.
 
  • Like
Reactions: Yourmaninvegas
Jan 9, 2004
9,344
667
113
For an expat contemplating a lease the above would be the first consideration - common sense hence no mention on my post.
Common sense and familiarity with all things Dominican for sure, but the stories abound about people trying to open those dreamed of tropical island businesses with only developed country experience/common sense and then failing because of the lack of experience/common sense in dealing/knowing of the local pitfalls......................are legend.




Respectfully,
Playacaribe2
 
  • Like
Reactions: Carl.L

korejdk_again

Newbie
Mar 26, 2019
19
3
3
Common sense and familiarity with all things Dominican for sure, but the stories abound about people trying to open those dreamed of tropical island businesses with only developed country experience/common sense and then failing because of the lack of experience/common sense in dealing/knowing of the local pitfalls......................are legend.




Respectfully,
Playacaribe2
AAA statement ; I have nothing else that can be added.
Well said!
 
  • Like
Reactions: Yourmaninvegas

Kricke87

Member
Feb 16, 2021
56
37
18
Sosúa

2019 they actually implemented a law that prohibits rental increases of more than 7% annually. I've always paid in pesos and never had any issues, mainly because me and my family are tranquil and responsible people, unlike many others the owners had to deal with. So I've actually never had an increase on the rentals during the time I've lived at that specific place.
This law also prohibits more than 2 deposits. Previously it was up to the owner to decide how many deposits that were required, normal being 2 or 3. But after this was implemented it stipulated maximum 2 deposits.

Can be good to know.

The peso generally goes up, and in may last year it went up from around 50 to around 58, and then stayed there around 58 and 59, but now have come down to just short of 58.
During the 10 years I've been living here it has gone from 37 to 58.
 

Yourmaninvegas

I am here to protect and serve
Feb 16, 2016
1,141
424
83
-
The peso generally goes up, and in may last year it went up from around 50 to around 58, and then stayed there around 58 and 59, but now have come down to just short of 58.
During the 10 years I've been living here it has gone from 37 to 58.
I know of no market that moves simply in one direction.
Accept in periods of 30 years or more. ;)