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?
Yep.Change your proposal to pay in US$, Does the owner realy want RD$?
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%.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?
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.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
JD You will be one of the first to know.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%.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.
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".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%.
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.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.
That depreciation rate has been +/- 5% annually for the last ten years, 2020 being an outlier at 10%.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!
For an expat contemplating a lease the above would be the first consideration - common sense hence no mention on my post.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
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.For an expat contemplating a lease the above would be the first consideration - common sense hence no mention on my post.
AAA statement ; I have nothing else that can be added.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
I know of no market that moves simply in one direction.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.